Garrett Security - Canada

Real Estate Mortgage Subordination Agreement

Subordination agreements can be used in different circumstances, including complex corporate debt structures. The Mortgagor essentially repays it and gets a new loan when a first mortgage is refinanced, which now puts the most recent new loan in second place. The second existing loan increases to become the first loan. The lender of the first mortgage refinancing now requires the second lender to sign a subordination agreement in order to reposition it as a priority when repaying the debt. The priority interests of each creditor are modified by mutual agreement by what they would otherwise have become. Subordination clauses in mortgages relate to the part of your agreement with the mortgage company, which states that its right of pledge prevails over any other pledge rights you may have on your property. Let`s go back a bit because we...
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