Virginia Real Estate Exam Practice Question
What is a subordination agreement?
Correct Answer: B
Rationale: A subordination agreement allows a later lender to take precedence over a previous lender, ensuring the new loan has priority in case of default. This is crucial for the new lender's risk assessment and investment security.
Option A is incorrect as it mischaracterizes the role of the court in bankruptcy; subordination agreements are not court-produced documents. Option C, while related to lien priority, does not specifically address the agreement between lenders, making it misleading. Option D incorrectly describes the lender's role, as it pertains to title transfer post-loan, not the prioritization of loans.
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