Are electronic signatures legally binding for this document?

Yes. Under the federal ESIGN Act (15 U.S.C. ch. 96, 2000) and state UETA laws, electronic signatures are generally treated as legally equivalent to handwritten signatures if intent, consent, attribution, and retention are satisfied. Certain exceptions, like wills and court orders, still require paper.

Is remote online notarization allowed for subordinations?

Remote online notarization is permitted in many states but rules vary; typical RON requirements include identity proofing, multi-factor authentication, and retained audio-video recording. Verify with the state notary commission; some states require in-person notarization for certain documents.

What if party names or signatures mismatch?

Mismatched names or signature methods can delay recording or create enforceability challenges; confirm legal names, provide evidence of authority, and obtain corrected documents. For tax reporting, incorrect TINs can trigger backup withholding obligations.

Do subordinating lienholders have to sign?

Yes when the lender is subordinating its priority; subordinating lienholders must provide clear, authorized consent. Some agreements permit conditional or limited consents; obtain evidence of authority and, if required, notarization or corporate incumbency certificates to avoid later disputes.

How do I record the agreement after signing?

Record the agreement with the county recorder where the property is located if the jurisdiction requires it. Include accurate legal descriptions and any required acknowledgements; submit originals or certified copies per local rules. Consult title counsel for title insurance impacts.

Can this be executed using signNow?

Yes. signNow supports ESIGN and UETA-compliant electronic execution with audit trails, TLS 1.2/1.3 transport encryption, and AES-256 at rest. For PHI, a BAA is required. Verify platform authentication and retain records for recording or title review.

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Farbar Subordination Agreement

Farbar Subordination Agreement

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SUBORDINATION AGREEMENT

THIS AGREEMENT, dated as of this the day of , 20 , is made by and among ( ) and .

WITNESSETH:

WHEREAS, is the holder of a lien on certain real property pursuant to a Deed of Trust or Mortgage executed by , Borrower(s), for the use and benefit of , beneficiary, dated and recorded in Book at Page in the Deed of Trust or Mortgage records of the of County, (the "First Deed of Trust or Mortgage"); and

WHEREAS, is also the holder of a lien on the property described in said Deed of Trust or Mortgage pursuant to a Deed of Trust or Mortgage dated and recorded in the office of the aforesaid in Deed of Trust or Mortgage Record Book at Page (the "Second Deed of Trust Mortgage"); and

WHEREAS, has requested that subordinate its lien to the lien of the Second Deed of Trust or Mortgage.

OR

WHEREAS, has been requested to subordinate it's Deed of Trust or Mortgage to a Deed of Trust or Mortgage to be executed to in the principal amount not to exceed $ ;

NOW, THEREFORE, for valuable consideration, hereby subordinates the lien of its Deed of Trust or Mortgage recorded in Book at Page to the executed to , beneficiary, and recorded in Book at page and the lien of the Second Deed of Trust will at all times be prior and superior to the lien of the First Deed of Trust from this date forward.

IN WITNESS WHEREOF, the parties hereto have executed this Subordination Agreement on the day and year first above written.

[corporate signature and acknowledgement]

BY:

ITS

STATE OF

COUNTY OF

Personally appeared before me, the undersigned authority in and for the said County and State, on this day of , 20 , within my jurisdiction, the within named , who acknowledged that he is of , a corporation, and that for and on behalf of the said corporation, and as its act and deed, he executed the above and foregoing Subordination Agreement, after first having been duly authorized by said corporation so to do.

SWORN TO AND SUBSCRIBED BEFORE ME, THIS THE DAY OF , 20 .

NOTARY PUBLIC

My Commission Expires:

[individual signature and acknowledgement]

STATE OF

COUNTY OF

Personally appeared before me, the undersigned authority in and for the said County and State, on this day of , 20 , within my jurisdiction, the within named , who acknowledged that he is of , a corporation, and that for and on behalf of the said corporation, and as its act and deed, he executed the above and foregoing Subordination Agreement, after first having been duly authorized by said corporation so to do.

SWORN TO AND SUBSCRIBED BEFORE ME, THIS THE DAY OF , 20 .

NOTARY PUBLIC

My Commission Expires:

What the Farbar Subordination Agreement Is

Farbar Subordination Agreement is a legal contract used to change the priority of liens or security interests by placing one lien beneath another. Typically executed between creditors, the borrower, and often a mortgagee or trustee, the agreement clarifies which debt takes precedence on a specific asset such as real property or collateral. It outlines the subordinated party's consent to defer enforcement or repayment priority and includes effective dates, scope, and conditions for release. In many transactions this document enables refinancing, new financing, or structured debt arrangements while preserving enforceability under applicable electronic signature laws.

Why Parties Rely on a Subordination Agreement

Use a Farbar Subordination Agreement to clear title priority for new lenders, enable refinancing, or document negotiated creditor priorities. It reduces disputes over enforcement order, supports structured financings, and when e-signed under ESIGN or UETA provides a reproducible record that courts typically accept.

Who Typically Prepares or Signs This Agreement

Common parties who complete or request a Farbar Subordination Agreement include lenders, borrowers, and title companies involved in financing or refinancing transactions.

Primary lender or mortgagee seeking clear priority before new debt is recorded.
Borrower facilitating refinancing or subordinating existing liens to obtain better terms.
Title companies and closing agents ensuring chain of title and recording accuracy.

Law firms, servicers, and institutional investors also use these agreements for portfolio restructures and secured transaction documentation.

Key Sections to Include in a Professional Subordination Agreement

Core sections of a Farbar Subordination Agreement define scope, priority adjustment, release, effective date, representations, and lender consents and enforcement mechanics.

Scope

Defines which liens or security interests are affected, the collateral description, and limits on the subordination including whether it applies to future advances or specific obligations.

Priority Adjustment

Specifies the new priority ordering, conditions for elevation or demotion of claims, and how payments are allocated among secured parties under default, including deferral periods and subordination termination events.

Effective Date

States the effective date and any retroactive effect, which determines when priority changes apply and affects recording, notice obligations, and the timeline for lender consent or release actions.

Representations

Includes borrower and creditor representations about existing liens, absence of defaults, and authority to enter the agreement; these statements support enforceability and reliance by other parties.

Lender Consent

Sets out signatures, notarizations, or electronic acceptance required from subordinating lienholders and any conditions for conditional consents or limited waivers of rights, including required authentication methods and effective periods.

Release/Termination

Defines events that terminate subordination, release mechanics, and procedures for recordation or notice when the subordinated lien is reinstated or released from priority limitations in writing.

Step-by-Step: Complete and Execute the Agreement

Follow these steps to complete and execute a Farbar Subordination Agreement accurately and in proper order.

01

Gather Documents: Collect existing mortgages, title reports, and loan schedules.
02

Draft Agreement: Specify collateral, parties, priority changes, and effective date.
03

Obtain Consents: Secure signatures from subordinating lienholders and any required notarizations.
04

Record as Needed: File or record with county recorder when required.

Execution Workflow Overview

Overview of routing and execution for the Farbar Subordination Agreement in typical transactions, including recording steps.

Prepare Draft: Attorney or lender prepares the draft agreement.
Review: Each creditor reviews and requests clarifications.
Sign: Signatures obtained physically or electronically with agreed authentication.
Record: Record or file per local recording rules if required.

Technical Requirements for Electronic Execution

Digital execution requires compatible file formats, secure transmission, and agreed authentication strength among parties for validity.

File Formats: PDF, DOCX supported for signing.
Integrations: CRM and ERP connectors ease workflows.
Authentication: Email, SMS, KBA, or stronger methods.

Security, Compliance, and Recordkeeping Essentials

eSignature Law: ESIGN Act and UETA apply.

Encryption: TLS 1.2/1.3 in transit, AES-256 at rest.

Audit Trail: Timestamp, IP, action log retained.

HIPAA: BAA required for protected health information.

Notarization: State rules govern notarization and RON.

Retention: Keep signed record capable of reproduction.

Timing Considerations and Deadlines

Key timing considerations include execution before funding, recording windows, and deadlines for lender responses or tax reporting adjustments.

Execution Before Closing:

Sign prior to loan funding to ensure priority is resolved.

Recording Window:

Record where required promptly; delays risk intervening liens.

Lender Response Time:

Allow reasonable review time—commonly 5–15 business days.

Tax Reporting:

Update payee reporting if subordination affects payment obligation.

RON Record Retention:

If notarized remotely, retain A/V recording per state rules, often five to ten years.

Common Pitfalls to Avoid

Failing to describe collateral precisely, leading to ambiguity about which liens are subordinated and causing delays or litigation during closing.
Overlooking whether subordination covers future advances or only existing indebtedness, which can expose parties to unintended priority shifts.
Using inconsistent signature methods across parties, such as some signed physically and others via weak electronic authentication, complicates enforceability.
Neglecting state notary rules or remote online notarization requirements can lead to invalid acknowledgements and recording rejections.

Consequences of an Incorrect or Incomplete Agreement

Priority Disputes: Costs and litigation exposure.

Recording Errors: Missed filings may invalidate priority.

TIN/Tax Risk: Incorrect reporting triggers penalties.

Enforceability Risk: Improper consent leads to void agreements.

Foreclosure Impact: Subordination alters recovery waterfall.

Notary Noncompliance: Missing notarization may reduce weight.

E-signature Vendor Pricing and Feature Snapshot

Vendor pricing and feature comparison for e-signature capabilities relevant to executing subordination agreements and secure document workflows.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies	Varies	Varies	Varies
Bulk Send	Yes (Premium)	Varies	Varies	Varies	Varies
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

FAQs — Common Execution and Validity Questions

Common questions about executing and validating a Farbar Subordination Agreement electronically, including legal validity, notarization, recording, and best practices.

Need help? Contact support

Are electronic signatures legally binding for this document?
Yes. Under the federal ESIGN Act (15 U.S.C. ch. 96, 2000) and state UETA laws, electronic signatures are generally treated as legally equivalent to handwritten signatures if intent, consent, attribution, and retention are satisfied. Certain exceptions, like wills and court orders, still require paper.
Is remote online notarization allowed for subordinations?
Remote online notarization is permitted in many states but rules vary; typical RON requirements include identity proofing, multi-factor authentication, and retained audio-video recording. Verify with the state notary commission; some states require in-person notarization for certain documents.
What if party names or signatures mismatch?
Mismatched names or signature methods can delay recording or create enforceability challenges; confirm legal names, provide evidence of authority, and obtain corrected documents. For tax reporting, incorrect TINs can trigger backup withholding obligations.
Do subordinating lienholders have to sign?
Yes when the lender is subordinating its priority; subordinating lienholders must provide clear, authorized consent. Some agreements permit conditional or limited consents; obtain evidence of authority and, if required, notarization or corporate incumbency certificates to avoid later disputes.
How do I record the agreement after signing?
Record the agreement with the county recorder where the property is located if the jurisdiction requires it. Include accurate legal descriptions and any required acknowledgements; submit originals or certified copies per local rules. Consult title counsel for title insurance impacts.
Can this be executed using signNow?
Yes. signNow supports ESIGN and UETA-compliant electronic execution with audit trails, TLS 1.2/1.3 transport encryption, and AES-256 at rest. For PHI, a BAA is required. Verify platform authentication and retain records for recording or title review.

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