In lien priority terms, a subordination clause allows which of the following?

In lien priority terms, a subordination clause allows which of the following?

• A. A later lien may take priority over an earlier lien.
• B. A later lien cannot take priority over an earlier lien.
• C. All liens share equal priority.
• D. The clause eliminates all liens.

Answer: (A)

A subordination clause changes the usual order of liens by letting a later lien take priority over an earlier one. Normally, liens recorded first have the higher priority, meaning they get paid first if the property is sold or foreclosed. When this clause is in place, the holder of the earlier lien agrees to subordinate to the newer lien, so the newer debt can be paid first. This is commonly used when obtaining a new loan or refinancing, where the new lender wants first priority and the existing lender agrees to subordinate to that new lien. It doesn't erase liens or make all liens equal; it simply adjusts who gets paid first.

A subordination clause changes the usual order of liens by letting a later lien take priority over an earlier one. Normally, liens recorded first have the higher priority, meaning they get paid first if the property is sold or foreclosed. When this clause is in place, the holder of the earlier lien agrees to subordinate to the newer lien, so the newer debt can be paid first. This is commonly used when obtaining a new loan or refinancing, where the new lender wants first priority and the existing lender agrees to subordinate to that new lien. It doesn't erase liens or make all liens equal; it simply adjusts who gets paid first.