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Subordination Agreement

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SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS AGREEMENT is made and entered into as of the day of , , , by and among ("Tenant") and , (ALender"), whose principal address is , and (ABorrower).

RECITALS:

A. Lender has agreed to amend and restate a loan (the ALoan") made to Borrower in the amount of $ to be secured by a Deed of Trust (the "Deed of Trust") on the real property legally described in Exhibits attached hereto (the "Premises");

B. Tenant is the present lessee under a lease dated , made by , ("Landlord"), demising a portion of the Premises and other property (said lease and all amendments thereto being referred to as the "Lease");

C. The Loan terms require that Tenant subordinate the Lease and its interest in the Premises in all respects to the lien of the Deed of Trust and that Tenant attorn to Lender; and

D. In return, Lender is agreeable to not disturbing Tenant's possession of the portion of the Premises covered by the Lease (the "Demised Premises"), so long as Tenant is not in default under the Lease.

NOW, THEREFORE, in consideration for the mutual covenants contained herein and other consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

AGREEMENTS:

1. Subordination. The Lease, and the rights of Tenant in, to and under the Lease and the Demised Premises, are hereby subjected and subordinated to the lien of the Deed of Trust and to any modification, reinstatement, extension, supplement, consolidation or replacement thereof as well as any advances or re-advances with interest thereon and to any mortgages or deeds of trust on the Premises which may hereafter be held by Lender.

2. Tenant Not to Be Disturbed. In the event it should become necessary to foreclose the Deed of Trust or Lender should otherwise come into possession of title to the Premises, Lender will not join Tenant in summary or foreclosure proceedings unless required by law in order to obtain jurisdiction, but in such event no judgment foreclosing the Lease will be sought, and Lender will not disturb the use and occupancy of Tenant under the Lease so long as Tenant is not in default under any of the terms, covenants or conditions of the Lease and has not prepaid the rent except monthly in advance as provided by the terms of the Lease.

3. Tenant to Attorn to Lender. Tenant agrees that in the event any proceedings are brought for foreclosure of the Deed of Trust, it will attorn to the purchaser as the landlord under the Lease. The purchaser by virtue of such foreclosure shall be deemed to have assumed and agreed to be bound, as substitute landlord, by the terms and conditions of the Lease until the resale or other disposition of its interest by such purchaser, except that such assumption shall not be deemed of itself an acknowledgment by such purchaser of the validity of any then existing claims of Tenant against any prior landlord (including Landlord). All rights and obligations under the Lease shall continue as though such foreclosure proceedings had not been brought, except as aforesaid. Tenant agrees to execute and deliver to any such purchaser such further assurance and other documents, including a new lease upon the same terms and conditions of the Lease, confirming the foregoing as such purchaser may reasonably request. Tenant waives the provisions (i) contained in the Lease or any other agreement relating thereto and (ii) of any statute or rule of law now or hereafter in effect which may give or purport to give it any right or election to terminate or otherwise adversely affect the Lease and the obligations of Tenant thereunder by reason of any foreclosure proceeding.

4. Limitations. Notwithstanding the foregoing, neither Lender nor such other purchaser shall in any event be:

(a) liable for any act or omission of any prior landlord (including Landlord);

(b) obligated to cure any defaults of any prior landlord (including Landlord) which occurred prior to the time that Lender or such other purchaser succeeded to the interest of such prior landlord under the Lease;

(c) subject to any offsets or defenses which Tenant may be entitled to assert against any prior landlord (including Landlord);

(d) bound by any payment of rent or additional rent by Tenant to any prior landlord (including Landlord) for more than one month in advance;

(e) bound by any amendment or modification of the Lease made without the written consent of Lender or such other purchaser; or

(f) liable or responsible for, or with respect to, the retention, application and/or return to Tenant of any security deposit paid to any prior landlord (including Landlord), whether or not still held by such prior landlord, unless and until Lender or such other purchaser has actually received for its own account as landlord the full amount of such security deposit.

5. Acknowledgment of Assignment of Lease and Rent. Tenant acknowledges that it has notice that the Lease and the rent and all other sums due thereunder have been assigned or are to be assigned to Lender as security for the Loan secured by the Deed of Trust. In the event that Lender notifies Tenant of a default under the Deed of Trust and demands that Tenant pay its rent and all other sums due under the Lease to Lender, Tenant agrees that it will honor such demand and pay its rent and all other sums due under the Lease directly to Lender or as otherwise required pursuant to such notice.

6. Limited Liability. Tenant acknowledges that in all events, the liability of Lender and any purchaser shall be limited and restricted to their interest in the Premises and shall in no event exceed such interest.

7. Lender's Right to Notice of Default and Option to Cure. Tenant will give written notice to Lender of any default by Landlord under the Lease by mailing a copy of the same by certified mail, postage prepaid, addressed as follows (or to such other address as may be specified from time to time by Lender to Tenant):

To Lender:

Upon such notice, Lender shall be permitted and shall have the option, in its sole and absolute discretion, to cure any such default during the period of time during which the Landlord would be permitted to cure such default, but in any event Lender shall have a period of ( ) days after the receipt of such notification to cure such default; provided, however, that in the event Lender is unable to cure the default by exercise of reasonable diligence within such ( )-day period, Lender shall have such additional period of time as may be reasonably required to remedy such default with reasonable dispatch.

Tenant waives the provisions of any statute or rule of law now or hereafter in effect which may give or purport to give it any right or election to terminate or otherwise adversely affect the Lease and the obligations of Tenant thereunder in connection with any foreclosure proceedings.

8. Successors and Assigns. The provisions of this Agreement are binding upon and shall inure to the benefit of the heirs, successors and assigns of the parties hereof.

IN WITNESS WHEREOF, the parties hereto have executed these presents the day and year first above written.

WITNESSED:

TENANT:

By:

Name:

Title:

LENDER:

LENDER SIGNATURE:

By:

Name:

Title:

BORROWER CONSENT:

Name:

Title:

Name:

Title:

Name:

Title:

NOTARY ACKNOWLEDGMENTS

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 is of , a , and that for and on behalf of the said corporation, and as its act and deed executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do.

____________________________

NOTARY PUBLIC

My commission expires:

(Affix notarial seal)

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 is of , a , and that for and on behalf of the said , and as its act and deed executed the above and foregoing instrument, after first having been duly authorized by said so to do.

____________________________

NOTARY PUBLIC

My commission expires:

(Affix notarial seal)

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 is of , a , and that for and on behalf of the said , and as its act and deed executed the above and foregoing instrument, after first having been duly authorized by said so to do.

____________________________

NOTARY PUBLIC

My commission expires:

(Affix notarial seal)

STATE OF )

COUNTY OF )

On this day of , 20 , before me personally appeared , to me known to be the of , the corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said , for the uses and purposes therein mentioned, and on oath stated that was authorized to execute said instrument.

________________________________

Notary Public

Enter text✕

What a Subordination Agreement Is and when it matters

A Subordination Agreement is a contract that changes the priority of liens or security interests between creditors so one claim ranks ahead of another. Common in real estate and lending, it lets a junior lien become subordinate to a new or existing senior lien. The agreement identifies the secured parties, the collateral or mortgage, the priority being altered, effective date, and whether recording or lender consent is required. Proper execution, notarization, and accurate recording (when applicable) are key to ensuring the priority change is recognized by title companies and public records.

Why parties use a Subordination Agreement

Subordination enables refinancing, new lending, or improved title marketability by formally shifting lien priority. It preserves access to capital while clarifying repayment order for multiple secured creditors under a single collateral pool.

Why parties use a Subordination Agreement

Who typically prepares and signs this agreement

Lenders, title companies, borrowers, and counsel commonly prepare or request subordination agreements during financing or closing transactions.

  • Commercial banks and mortgage lenders often require formal subordination to protect new loans or refinances.
  • Title companies request subordinations to clear title exceptions for closings and insurance.
  • Borrowers or property owners sign where their prior liens must yield priority for new financing.

Ensure each signing party has authority to bind their entity and that recording requirements are confirmed with local recording offices.

Primary signers and decision makers

Lender

Representatives of lending institutions (underwriting, counsel, or loan administration) must approve priority changes and sign on behalf of the secured creditor pursuant to delegated authority or board resolution.

Borrower

The property owner or obligor typically signs to acknowledge the subordination; if the owner is a legal entity, the signer must have documented authority to bind the entity under corporate or LLC records.

Security, compliance, and technical details to note

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
Audit Trail: Timestamps, IP, and signer actions recorded
HIPAA: BAA available when PHI present
ESIGN / UETA: Compliant for enforceability in the U.S.
21 CFR Part 11: Supported for regulated records
Access Controls: Role-based permissions and SSO

Primary risks and legal exposure

Recording rejection: Incorrect acknowledgement
Priority dispute: Unrecorded changes contested
Invalid signature: Insufficient authority
Tax or lien consequences: Unaddressed encumbrances remain
Delay to closing: Missing lender consent
Enforceability challenge: Improper execution format

Common preparation errors to avoid

  • Using inconsistent party names between the agreement and recorded instruments causes recording officers or title underwriters to reject or flag documents.
  • Failing to confirm that the signer has corporate authority or an executed corporate resolution can render the subordination unenforceable against the entity.
  • Neglecting to include an accurate legal description of the collateral or property leads to ambiguity about which lien is subordinated.
  • Assuming electronic signatures are acceptable without checking lender policy, statutory exceptions, or required notarization can invalidate execution.

How to complete a Subordination Agreement step by step

Follow a consistent sequence to reduce errors and speed review: identify parties, confirm authority, fill key fields, obtain required notarization or witness signatures, and record if needed.

  • 01
    Confirm parties: Verify full legal names and capacity for each signer.
  • 02
    Describe collateral: Enter the exact legal description or secured asset details.
  • 03
    Set effective date: Use MM/DD/YYYY and confirm lender acceptance.
  • 04
    Execute and record: Sign, notarize if required, then file with recorder.

Typical workflow for issuing and accepting a subordination

A predictable routing flow helps lenders and title agents process subordinations quickly while preserving chain-of-title clarity.

  • Request: Borrower or new lender requests subordination from existing lienholder.
  • Review: Existing creditor reviews loan file and consent conditions.
  • Sign: Authorized signers execute; notarization if required.
  • Record: File with county recorder when public notice is necessary.

Essential components every professional Subordination Agreement should include

A comprehensive agreement documents the priority change clearly and provides the records and authorities necessary for public notice, enforceability, and lender underwriting acceptance.

Identifying parties

Full legal names, entity type, and contact information for the subordinating creditor, senior creditor, and obligor.

Recitals

Background statements identifying the original lien, recording instrument (book/page or document number), and why priority is altered.

Subordination clause

Clear operative language stating which lien is subordinated and the new priority order with scope and limitations.

Effective date

Exact MM/DD/YYYY date when subordination takes effect and any conditions precedent to effectiveness.

Execution block

Signature lines, printed names, titles, and dates for authorized signers; include notary block where required.

Recording and notices

Statement about whether the agreement will be recorded, who will record it, and required notice addresses for each party.

Typical timing and processing expectations

Timing depends on lender review cycles, notary availability, and county recorder backlog; plan for potential delays during high-volume periods.

Lender review:

Allow 3–10 business days for creditor approval

Notarization:

Typically same-day when a notary is available

County recording:

Processing ranges by county; allow 2–6 weeks

Title update:

Title companies may take days to issue endorsements

Expiration clauses:

Watch conditional effective dates and sunset provisions in the agreement

How a Subordination Agreement compares with related instruments

Compare purpose, parties, and recording practices to determine which instrument fits the transaction.

Criteria Subordination Agreement Intercreditor Agreement
Primary purpose change lien priority allocate rights among lenders
Parties involved existing lienholder & new creditor multiple lenders/agents
Recording required occasionally recorded rarely recorded; internal agreement
Typical use refinance or new mortgage syndicated loan or multi-lender facility

Configuration checklist for digital completion and routing

Set up fields, authentication, and conditional routing in this order to ensure a smooth eSigning process and valid record.

Field Configuration
Signer authentication Email link or SMS code; use stronger methods for higher risk
Signature fields Signature, date, and printed name fields required for each party
Conditional routing Route to lender counsel or title agent after execution
File formats Use PDF/A for long-term archival and recorder compatibility

Technical options for digital signing and distribution

Choose integrations and file formats that match your lender and title partner workflows.

  • Integrations: Salesforce, NetSuite, Microsoft 365, Google Workspace
  • File formats: PDF, DOCX, fillable PDF supported
  • Authentication: Email, SMS, KBA, or advanced methods

Confirm the receiving party accepts electronic records and whether notarization or recorded acknowledgement will be required before finalizing the workflow.

Real-world examples of Subordination Agreements in use

Practical examples illustrate how lenders and businesses use subordinations to facilitate refinancing and closings.

Optica Ventures — Brian Fitzgibbons

A small lending firm streamlined subordinations during portfolio refinances by standardizing forms and signatures.

  • They combined lender consent templates with electronic routing.
  • The result reduced time-to-close and cut manual errors while preserving clear public-record references for title insurance.

Martin Properties — Tim Martin

A property manager used digital templates for subordinations to support multiple refinances.

  • Mobile signing allowed on-site execution.
  • This approach enabled consistent execution, satisfied lender underwriting checks, and improved turnaround when recording documents with county offices.

Key milestones from request to recorded priority change

Track these milestones to keep the transaction moving and maintain clear responsibility for each step.

01

Request submitted

Borrower or new lender requests subordination from existing creditor.

02

Creditor review

Existing creditor assesses loan file and conditions for consent.

03

Execution and notarization

Authorized signers execute and notarize when required.

04

Recording and confirmation

Recorder files instrument and title is updated accordingly.

Frequently asked questions about Subordination Agreements

Answers to common legal, execution, and recording questions when preparing or accepting a subordination agreement.


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eSignature vendor pricing and capability snapshot for signing subordinations

Select an eSignature provider that meets security, compliance, and volume needs. The table below compares starting price, trial availability, bulk send, audit trail, HIPAA support, and envelope limits across vendors.

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 trial No No Yes, limited Yes, limited
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan
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