Alabama Prior Lienholder's Agreement and subordination
What this document covers
The Prior Lienholder's Agreement and Subordination is a legal document that outlines the terms under which a prior lienholder agrees to subordinate their interest in a property to a new lender. This allows the new loan to take priority, often in exchange for partial payment of the original debt. This form is distinct from other lien agreements as it specifically addresses the subordination of existing liens on real property, making it essential for transactions involving refinancing or additional financing where the original obligation needs to be altered.
Key parts of this document
- Identification of parties: Specifies the prior lienholder, new lender, and borrower.
- Recitals: Details the original loan and mortgage securing the previous debt.
- Balance acknowledgment: States the principal balance remaining on the prior loan after the new loan's funding.
- Subordination clauses: Establishes the priority of the new mortgage over future advances and fees from the prior lienholder.
- Default notice requirements: Outlines the notification process in case of default under the prior loan.
Situations where this form applies
This form is particularly useful when a borrower seeks to refinance their property by securing a new loan while an existing lien is still in place. It is also applicable when a borrower needs to negotiate terms with a prior lienholder to allow for additional financing. Essentially, you would use this agreement when a lender requires an assurance that their loan will have priority over existing debts secured by the same property.
Intended users of this form
- Borrowers seeking to refinance their property with a new loan.
- Lenders offering new loans who need to secure their interest over prior liens.
- Prior lienholders willing to subordinate their interests for financial gain.
- Legal professionals involved in real estate transactions.
How to complete this form
- Identify the prior lienholder, new lender, and borrower in the designated sections.
- Specify the original loan amount and details of the prior lienholderâs mortgage.
- Indicate the amount of the new loan that will be funded.
- Include necessary terms covering subordination and default notification procedures.
- Have all parties sign and date the agreement in the appropriate areas.
Notarization requirements for this form
To make this form legally binding, it must be notarized. Our online notarization service, powered by Notarize, lets you verify and sign documents remotely through an encrypted video session.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Typical mistakes to avoid
- Failing to accurately define the parties involved.
- Omitting critical loan amounts or property details.
- Not clarifying the terms of subordination or default notice requirements.
- Neglecting to obtain signatures from all relevant parties.
Why complete this form online
- Easy access to a professionally drafted agreement tailored for your needs.
- Convenient editing options to customize specific details quickly.
- Reliable and legal templates that meet state-specific requirements.
- Time-saving process that eliminates the need for complex legal consultations.
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FAQ
But as property values are going up and the demand for refinance isn't as much, it seems that the subordination process has gotten a little easier. Typically, it takes two to three weeks to get the resubordination paperwork through, and it is likely to set you back $200 to $300.
But as property values are going up and the demand for refinance isn't as much, it seems that the subordination process has gotten a little easier. Typically, it takes two to three weeks to get the resubordination paperwork through, and it is likely to set you back $200 to $300.
Unless there is a subordination agreement, it is virtually impossible to refinance your first mortgage. The document agreeing to the subordination must be signed by the lender and the borrower and requires notarization.
A subordination fee is a fee directly related to the credit transaction. There is no comparable cash transaction to compare it to and a subordination is not a required document to perfect your lien. It's only required to perfect your lien in the position that you required as a condition of making the loan.
Subordination agreements are prepared by your lender. The process occurs internally if you only have one lender. When your mortgage and home equity line or loan have different lenders, both financial institutions work together to draft the necessary paperwork.
The signed agreement must be acknowledged by a notary and recorded in the official records of the county to be enforceable.
A subordination agreement acknowledges that one party's claim or interest is superior to that of another party in the event that the borrower's assets must be liquidated to repay the debts.
What is a Subordinate Mortgage? Subordinate mortgages are loans that have a lower priority status than any other recorded liens (or debts) against a property. When you get the loan you need to purchase your home, this loan is typically recorded as the first repayment priority on your deed after closing.
