North Carolina Subordination of Lien refers to a legal process through which a creditor allows their lien on a property to be secondary to the lien of another creditor. This means that in the event of foreclosure or sale of the property, the lien holder with the higher priority will be paid off first before the subordinate lien holder. In North Carolina, there are three main types of Subordination of Lien: 1. Voluntary Subordination of Lien: This type occurs when the lien holder voluntarily agrees to subordinate their lien to another creditor. This could be done to facilitate a refinancing or to allow for the primary lender to take priority in the event of a foreclosure. 2. Partial Subordination of Lien: This type involves subordinating only a portion of the lien amount. It may occur when multiple creditors have liens on a particular property, and one of them agrees to subordinate their lien on a specific portion of the property. 3. Intercreditor Subordination Agreement: This type of subordination is typically used in commercial real estate transactions where multiple lenders are involved. It outlines the priority of each creditor's lien, specifying the order in which they will be paid in the event of foreclosure or sale. The North Carolina Subordination of Lien process generally involves documentation of the agreement between the parties involved and the recording of the new lien priority with the county clerk's office in the county where the property is located. The purpose of the subordination is to establish and clarify the order of payment in case of default, foreclosure, or sale, ensuring that each creditor's interest in the property is protected. In summary, North Carolina Subordination of Lien is a legal process that allows for the reordering of lien priorities on a property. It ensures that creditors with higher priority liens are paid off first before those with subordinate liens. There are three main types of subordination: voluntary subordination, partial subordination, and intercreditor subordination agreement. Proper documentation and recording with the county clerk's office is essential for the process to be legally binding and effective.
North Carolina Subordination of Lien
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Finally, in North Carolina, a lien on real property must also be perfected by filing a lawsuit in the county where the property upon which work was performed is located. The lawsuit must be filed within 180 days from the date of last substantial furnishing of labor and/or materials on the property.
In North Carolina, a lien claimant has 120 days from the date of last furnishing to complete these 3 steps: Fill out a mechanics lien form that meets NC requirements. ... File the lien with the county recorder's office. ... Serve a copy of the lien on the property owner.
When you get a mortgage loan, the lender will likely include a subordination clause essentially stating that their lien will take precedence over any other liens placed on the house. A subordination clause serves to protect the lender if a homeowner defaults.
A subordination clause is a clause in an agreement that states that the current claim on any debts will take priority over any other claims formed in other agreements made in the future. Subordination is the act of yielding priority.
Example of a Subordination Agreement A standard subordination agreement covers property owners that take a second mortgage against a property. One loan becomes the subordinated debt, and the other becomes (or remains) the senior debt. Senior debt has higher claim priority than junior debt.
A subordinated loan is also known as subordinated debt, subordinated debenture, and junior debt. Subordinated debt holders receive payment after the senior debt has been fully settled in the event of a liquidation. High yield bonds and mezzanine debt are two examples of subordinated loans.
Subordination is the process of ranking home loans (mortgage, HELOC or home equity loan) by order of importance. When you have a home equity line of credit, for example, you actually have two loans ? your mortgage and HELOC. Both are secured by the collateral in your home at the same time.
Subordination is the process whereby one party is allowed to have a higher priority in potentially competing claims. Thus, the title insurance company and/or bank want to be ahead of any other potential claimant who has provided labor and/or materials.
