This office lease is subject and subordinate to all ground or underlying leases and to all mortgages which may affect the lease or the real property of which demised premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages. This clause shall be self-operative.
A California Subordination Provision is a clause included in various legal agreements, particularly in real estate transactions and loan agreements, to establish the priority of debt repayment or the order in which different creditors will be paid. In simpler terms, it determines the hierarchy of obligations and determines which debts must be paid first if there is a default or foreclosure on the property. The provision outlines the rights and priorities of different lien holders and lenders involved in a transaction, ensuring that everyone understands their respective positions. Different types of California Subordination Provisions include: 1. Mortgage Subordination: This type of provision deals with the priority of mortgage liens on a property. It determines whether an existing mortgage lien will be subordinate to a new mortgage being issued, giving the new mortgage priority in case of default. 2. Leasehold Subordination: This provision is common in commercial real estate transactions where a tenant agrees to subordinate their leasehold interest in the property to the interest of a lender. In the event of default, the lender's rights would take precedence over the tenant's rights. 3. Intercreditor Subordination: This occurs when multiple lenders are involved in a single transaction. An intercreditor subordination provision establishes the priority and rights among these lenders. It outlines how the proceeds from the sale or foreclosure of the property will be distributed among the lenders. 4. Standby Subordination: This type of subordination provision allows a lender to temporarily waive its priority position in favor of a lower-ranking lender. Standby subordination often occurs when a borrower seeks additional financing or refinances their existing debt but needs the consent and cooperation of the primary lender to proceed. In summary, a California Subordination Provision is a crucial legal safeguard to ensure clarity and precedence among creditors in various real estate and loan transactions. By specifying the types mentioned above, it clarifies the order of repayment for multiple debts in case of a default or foreclosure, providing security and guidance for all parties involved.
