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To pass your real estate exam, it's important to understand the terms subrogation and subordination. While these terms sound similar, they are distinct. Subrogation refers to the right of one party to pursue someone else's claim, often seen in contexts like leases, mortgage insurance policies, and legal agreements where one party waives their rights. Subordination, on the other hand, implies a hierarchy of claims, which is not applicable in subrogation. An analogy to clarify subrogation: if a bully damages your bike and your big brother steps in to handle the situation, that's akin to subrogation, as he is acting on your behalf to address the claim.
