what is subordination in real estate

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Subordination clauses in real estate,also calleddependent clauses,are contractual agreements used to indicate that current debt claims will take precedent over others made in the future. In effect,subordination is the action of one party yielding deferring priority to another party.

People also ask

  • What is a subordination agreement in real estate?

  • What is a Subordination Agreement in Real Estate? Are you trying to refinance your mortgage, but were told that you need a subordination agreement first? If so, that means you have two mortgages on your property. If you refinance the first mortgage, it can put the second mortgage in first lien position.

  • Can a second mortgage company sign a subordination agreement?

  • The subordination agreement isn an automatic thing. Your second mortgage company doesn have to sign the agreement. This would leave you without the chance to refinance, though. There are ways you can improve your chances of getting the agreement: Make your loan payments on time.

  • What does it mean to subordinate a loan?

  • To reduce the priority of payment of a debt or lien. For example, in order to enable a tract of land to be developed, the first mortgagee agrees to subordinate his or her loan to a new development mortgage loan that will now become the first mortgage.

  • What do you need to know about subordination of debt?

  • You need to show the lender that you are not a risk for default so they will agree to subordinate. You檒l have to ask the lender for the subordination as well as what requirements they have. Some lenders have specific requirements that go beyond the need to have a timely payment history.

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