Financing, 9% of the examination
Subordination clause
A provision letting an existing lien voluntarily take a lower priority than a later one.
A seller carrying financing may negotiate a lower lien position to allow a construction lender to obtain priority. This is not automatic or mandatory merely because development is proposed. The change can increase the subordinating creditor's risk if sale proceeds are insufficient to pay every lien.
Test the distinction
A relevant question from Financing, selected because its facts or explanation use this concept.
What does a due-on-sale clause do?
Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanor under B&P Code section 123.
Primary sources
Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.