Financing, 9% of the examination
Subordination clause
A provision letting an existing lien voluntarily take a lower priority than a later one.
It is essential in land development, where a construction lender insists on first position and a seller who carried back financing must step behind. It reduces the seller's security materially, so it deserves careful negotiation rather than routine acceptance.
See it in a question
One question from Financing, so the term lands in the context the exam uses it in.
Financing ยท 9%Mortgages/Deeds of Trust/Notes
California lenders overwhelmingly use a deed of trust rather than a mortgage. What practical difference matters most to a defaulting borrower?
Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanour under B&P Code section 123.