Escrow & Title
A subordination agreement in Arizona allows:
AA junior lien to remain subordinate to a new senior lien replacing the original✓ Correct
BA senior lien holder to take priority over the property taxes
CThe buyer to assume the existing mortgage
DThe seller to retain a lien after closing
Explanation
A subordination agreement allows a junior lienholder to agree to remain in a subordinate position to a new first lien, often used in refinancing when the property has a junior lien (like a seller carryback) that would otherwise become first in priority.
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Key Terms to Know
Lien
A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
ProrationThe division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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