Escrow & Title
A subordination agreement in Iowa real estate allows:
AA senior lienholder to release their lien
BA senior lienholders claim to be placed behind (subordinated to) a junior lien, changing priority✓ Correct
CA buyer to assume the seller's mortgage
DThe county to take priority over private liens
Explanation
A subordination agreement is a written contract in which a senior lienholder agrees to have their lien's priority position take a lower priority than a new or junior lien. This is common when refinancing or when a construction lender requires priority over a purchase money mortgage.
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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.
EncumbranceAny claim, lien, charge, or liability attached to real property that affects its value or limits its use.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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