Escrow & Title
What is a 'subordination agreement' in Rhode Island real estate finance?
AAn agreement where the buyer subordinates their down payment
BAn agreement where a junior lienholder agrees to remain in a lower priority position than a new senior lien✓ Correct
CAn agreement to delay closing by 30 days
DA court order to sell a property in foreclosure
Explanation
A subordination agreement is a document where the holder of a junior lien agrees to maintain their lien's subordinate position relative to a new or refinanced senior mortgage. This is often required when a property is refinanced.
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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.
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.
ProrationThe division of ongoing property expenses (taxes, HOA dues, rents) between buyer and seller at closing based on their respective days of ownership.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
Math Concepts
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