Clause in some mortgages which allows subsequent mortgages on the same property to have higher claim than the current mortgage.
A clause which may be included in a mortgage agreement in which the mortgagee (lender) agrees to permit a later-acquired mortgage to have legal priority. Such a clause is often included in a purchase money mortgage used in the acquisition of acreage property requiring a later construction or development loan. For example, a developer agrees to purchase 500 acres from a landowner for $100,000 down and a purchase money mortgage (owner financing) of $2,000,000 for the remainder of the purchase price. The developer may have paid a slightly higher price to induce the landowner to subordinate his legal position to an $8,000,000 loan secured by a mortgage being issued by a commercial bank. Thus, the commercial bank is in a first lien position and the landowner is in a junior (second) mortgage position.
Senior lien that makes it inferior to what would otherwise be a junior lien. Back to the Top
home loan clause that delineates that the rights of the individual name will be subordinates to a successive encumbrance.
Used in a first or senior lien permitting it to be subordinated to a subsequent lien, such as a construction loan. it converts a senior trust deed into a junior trust deed (second, third, etc.).
A clause which permits the placing of a mortgage at a later date which takes priority over an existing mortgage.
A provision in a mortgage or deed of trust that permits a later security instrument to have higher lien priority than the one in which the clause appears.
A clause in a mortgage or lease stating that one who has a prior claim or interest agrees that his/her claim or interest shall be secondary or subordinate to a subsequent claim, encumbrance, or interest.
Used to subordinate a lien to a subsequent lien.
An agreement by which a lien holder agrees to accept a lien position junior to that of a later-recorded lien. For example, when a lien holder agrees to subordinate, a formal agreement must be drawn, signed and recorded to make it a legal transaction.
An agreement under which a prior trust deed is made inferior to an otherwise junior lien. This is occasionally used when a land loan subordinates to a new construction loan.
A clause in a junior lien permitting retention of priority for prior liens OR it may be used in a first deed of trust permitting it to be subordinated to subsequent liens as, for example, the liens of construction loans.
An agreement by the lender which allows the current mortgage to be "postponed" or placed behind a later mortgage in priority.
A clause in a mortgage specifying that it remain in a particular position. For instance, a borrower may desire to pay off an existing first mortgage and replace it with a new first mortgage at a lower interest rate. If, however, the borrower also has a second mortgage, that mortgage will automatically move up to first position unless its holder agrees to be subordinated to the new mortgage.
A clause in a junior or a second lien permitting retention of priority for prior liens, or may also be used in a first deed of trust permitting it to be subordinated to subsequent liens.
An agreement to permit the claim by a holder of an encumbrance to take an inferior position to another encumbrance or encumbrances.
A clause in which the holder of a mortgage permits a subsequent mortgage to take priority. Subordination is the act of yielding priority. This clause provides that if a prior mortgage is paid off or renewed, the junior mortgage will continue in its subordinate position and will not automatically become a higher or first mortgage. A subordination clause is usually standard in a junior mortgage, because the junior mortgagee gets a higher interest rate and is often not concerned about the inferior mortgage position. (See junior mortgage)
A clause in a junior lien acknowledging the prior claim of a higher loan, as in a second-mortgage loan contract legally acknowledging the prior claim of the first mortgage. It also describes an agreement contained in purchase-money mortgages for land by which the purchase-money mortgage can be subordinated to a first mortgage to finance bona fide improvements.
A clause in a mortgage or lease stating that rights of the holder shall be secondary or subordinate to a subsequent encumbrance.
Clause or document that permits a mortgage recorded at a later date to take priority over an existing mortgage.
Typically found in a junior or second lien, it is a clause that states that the holder of an encumbrance against real property agrees to permit that claim to take an inferior position to other encumbrances against the property. Example; this clause may be used in a first trust deed which permits it to be subordinated to subsequent liens, such as the liens of construction loans.
