Add Subordination Agreement Signature Service with airSlate SignNow

Esign subordination agreement

hi this is Trevor and today we're talking about subordination subordination is when the claim of one creditor to a real estate asset is subordinated or made junior to the claim of another this is pretty common especially in the case of refinancing debt so let's talk about it now show you how it works imagine this is your timeline and here we have year 0 or the day of acquisition and on this date we have senior debt placed on the property and as we know claims to any real estate are prioritized in chronological order as to when they were made against the property were recorded on the title so when we have senior debt on a property if we go ahead and a little while later we add some junior debt the junior debt is subordinate to the senior debt in that it's claim on the title was made after the senior debt but then what happens if the senior debt refinances and a new loan is placed on after the junior debt so imagine that this debt goes away and now we have this debt well if this is the senior debt or the primary loan on the property if it was made chronologically after the junior debt then technically it would not have priority over the junior debt it would be subordinate so in this case typically senior debt holders will require that the junior debt holders sign what's called a subordination agreement and subordination agreements effectively say we as the junior debt holder agreed to subordinate behind whoever is executing the subordination agreement so effectively what would happen is the junior debt holders claim would now be subordinated behind the senior debt so that in the event of foreclosure the senior debt holder would be paid back first and then if there are excess funds left over then that junior debt holder will get paid this has been a quick overview of subordination thanks for watching