Escrow & TitleAdvancedDelaware Exam

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

AAn agreement by a senior lien holder to accept payments after a junior lien is paid

BAn agreement by a lienholder to accept a lower priority position relative to another lien — often required when refinancing or adding new financing

CAn agreement by a tenant to subordinate their lease rights to the lender's mortgage

DBoth B and C — subordination agreements are used in both mortgage and lease contextsCorrect

Why Both B and C — subordination agreements are used in both mortgage and lease contexts Is Correct

Answer D: Both B and C — subordination agreements are used in both mortgage and lease contexts

Subordination agreements are used in two real estate contexts: (1) mortgage subordination — a senior lienholder agrees to accept a lower priority to allow a new lender a superior position; (2) lease subordination (SNDA) — a tenant agrees their lease rights are subordinate to the lender's mortgage. Both protect lenders and are common in Delaware commercial real estate 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.

People Also Study

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.

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Study This Topic

Property Ownership Guide

Practice More Delaware Real Estate Questions

1,500+ questions covering all exam topics. Start free — no signup required.

Take the Free Delaware Quiz →