Escrow & Title
In New Jersey, a 'subordination agreement' in real estate financing causes:
AA junior lien to become senior to a previously recorded lien
BA senior lien holder to voluntarily accept a lower priority position relative to a new lien✓ Correct
CAll liens to share equally in a foreclosure
DThe property to be released from all liens
Explanation
A subordination agreement is a recorded document where a lien holder agrees to have their lien rank lower in priority than a new lien being placed on the property, typically to facilitate refinancing or construction financing.
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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.
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.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
EasementA non-possessory right to use another person's land for a specific purpose.
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