The lien priority of junior liens can be changed by a lienor's agreement to

The lien priority of junior liens can be changed by a lienor's agreement to

• A. forgive portions of the debt.
• B. assign the note.
• C. foreclose on the note.
• D. subordinate.

Answer: (D)

Lien priority can be changed when a lienor agrees to subordination. A subordination agreement is a voluntary promise by the holder of a junior lien to let a more senior lien take priority over theirs. This is common when a new loan is refinanced and the lender wants first-priority protection; the junior lienholder signs to subordinate, so the senior lien is paid first from any proceeds and the junior lien remains behind it. Forgiving part of the debt reduces the amount owed but does not alter the relative order of who gets paid first. Assigning the note shifts ownership of the debt but doesn’t inherently change the lien’s priority. Foreclosure on the note enforces the lien and determines who is paid from proceeds, but it doesn’t create a new priority arrangement by agreement.

Lien priority can be changed when a lienor agrees to subordination. A subordination agreement is a voluntary promise by the holder of a junior lien to let a more senior lien take priority over theirs. This is common when a new loan is refinanced and the lender wants first-priority protection; the junior lienholder signs to subordinate, so the senior lien is paid first from any proceeds and the junior lien remains behind it.

Forgiving part of the debt reduces the amount owed but does not alter the relative order of who gets paid first. Assigning the note shifts ownership of the debt but doesn’t inherently change the lien’s priority. Foreclosure on the note enforces the lien and determines who is paid from proceeds, but it doesn’t create a new priority arrangement by agreement.