A Subordination Clause is a clause in a legal document that states that one party's rights or obligations will be subordinate to those of another party. This type of clause is often used to create subordinated debt, also known as junior debt, whereby the payment of a senior debt is given priority over the payment of a junior debt. In other cases, a Subordination Clause may be used to subordinate one party's rights to those of another party in a contract. These clauses can be either bilateral, whereby both parties agree to subordinate their rights, or unilateral, whereby only one party is subordinating their rights. Examples of Subordination Clauses include lien subordination, leasehold subordination, mortgage subordination, and subordination of security interests.
Subordination Clause
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For example, "my brother loves hamburgers." Subordinate clauses (or dependent clauses) add extra information to the main clause and cannot exist on their own. For example, "unlike my brother, I don't eat meat." Here the bolded text - the subordinate clause - gives us additional information about the main clause.
A subordination clause serves to protect the lender if a homeowner defaults. If this happens, the lender then has the legal standing to repossess the home and cover their loan's outstanding balance first. If other subordinate mortgages are involved, the secondary liens will take a backseat in this process.
Example sentences using a subordinate clause If you win the award, I will buy you a new video game. Since the sun will shine today, we will go to the beach. When she was sick, her teacher gave the exam. Because mom said so, I apologized to Cecilia.
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.
The three main kinds of subordinate clause in English are the relative clause, the comparative clause, and the content clause.
Identifying Subordinate Clauses Subordinate clauses begin with certain words or short phrases called subordinating words (also known as dependent words, or subordinating/subordinate conjunctions). If a clause begins with a subordinating word, that clause is a subordinate clause and cannot stand alone as a sentence.
Subordinate clauses will often begin with subordinating conjunctions, which are words that link dependent clauses to independent clauses, such as for, as, since, therefore, hence, consequently, though, due to, provided that, because, unless, once, while, when, whenever, where, wherever, before, and after.
1 Subordination. To the extent and in the manner hereinafter set forth in this Agreement, each Obligor signatory hereto (on behalf of itself and each other Obligor) and each Junior Creditor agrees that payment of the Junior Debt is expressly subordinated to the prior Final Payment of all Senior Debt.