What is the term for when lien holders allow another lien holder's claim to have priority over their own?

The correct answer is the subordination agreement. This legal document is used to establish the priority of liens, allowing one lien holder to agree that another lien holder's claim will take precedence over their own. This can be important in real estate transactions, particularly when refinancing or obtaining new financing.

For instance, if a property owner wants to take out a second mortgage on a property that already has a first mortgage, the second mortgage lender may require a subordination agreement from the first mortgage lender. This ensures that the second mortgage is in a position to be paid before the first mortgage in the event of a default, which can make the second mortgage more appealing to the lender by adding additional security to their loan.

Equitable lien refers to a right to have a claim enforceable in equity against property, but it does not pertain specifically to the prioritization of claims. Lis pendens is a notice of a pending lawsuit that affects the title to a property, but it does not establish priority among liens. A voluntary lien is one that a property owner agrees to, such as a mortgage, but it also does not address priority among multiple lien holders.