Escrow & TitleIntermediateDelaware Exam

What is a 'subordination agreement' in Delaware real estate?

AAn agreement where the tenant agrees to subordinate their interests to the landlord
BAn agreement where the holder of a senior lien agrees to allow a junior lien to take priorityCorrect
CAn agreement between co-owners about property management
DA contract clause giving the buyer priority over the seller in selecting escrow agents

Why An agreement where the holder of a senior lien agrees to allow a junior lien to take priority Is Correct

Answer B: An agreement where the holder of a senior lien agrees to allow a junior lien to take priority

A subordination agreement is a document in which the holder of a senior (earlier) lien agrees that their lien will be placed in a subordinate (lower) position relative to a newer lien. Lenders often require SNDAs (Subordination, Non-Disturbance, and Attornment agreements) in commercial transactions.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

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.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

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