Subordination Provision
What is this form?
The subordination provision is a legal clause in an office lease agreement that establishes the lease's subordination to any ground or underlying leases and mortgages. This means that the lease will take a lower priority compared to these other agreements. This form is essential for landlords and tenants who wish to clarify the hierarchy of ownership and financial obligations regarding the leased property. Unlike standard lease agreements, this provision specifically addresses the relationship between multiple leases and creditors, ensuring that there is no misunderstanding about the order of rights and claims to the property.
What’s included in this form
- Subordination of the lease to all existing and future ground or underlying leases and mortgages.
- Self-operative nature of the clause requiring no additional subordination instrument.
- Tenant's obligation to confirm subordination by executing a certificate upon request by the owner.
When to use this document
This form is used when entering into an office lease where it is necessary to establish the lease's subordination to pre-existing or future financial encumbrances. It is particularly useful in commercial property transactions where multiple leases or mortgages may affect the property's legal status. Situations that commonly require this form include leasing office spaces in multi-tenant buildings, negotiating terms with lenders, or when a property owner seeks to refinance the property with existing tenants in place.
Who can use this document
- Landlords wishing to secure priority over tenants in case of financial claims on the property.
- Tenants who want to understand their rights and obligations in relation to future mortgages.
- Real estate lawyers assisting clients with commercial lease agreements.
- Property managers responsible for managing leases in multi-tenant properties.
Instructions for completing this form
- Review the lease agreement to identify applicable underlying leases and mortgages.
- Include the names of all parties involved in the lease agreement.
- Specify the property being leased, including its location and relevant details.
- Ensure that all parties read and understand the implications of the subordination clause.
- After mutual agreement, have all parties sign and date the document.
Does this document require notarization?
Notarization is not commonly needed for this form. However, certain documents or local rules may make it necessary. Our notarization service, powered by Notarize, allows you to finalize it securely online anytime, day or night.
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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.
Common mistakes
- Not clearly identifying all underlying leases or mortgages that may affect the property.
- Failing to have all parties sign the document, rendering it unenforceable.
- Overlooking the need to explain the subordination clause to tenants.
Advantages of online completion
- Convenient access to legally vetted templates that save time and effort.
- Editability allows customization to fit specific lease agreements and state laws.
- Reliable creation of essential lease documents without the need for in-person appointments.
Legal use & context
- The subordination provision is legally enforceable under real estate law.
- Understand that the rights of tenants may be affected by the subordination clause.
- Consult with a legal expert if there are concerns regarding the implications of this provision.
Key takeaways
- The subordination provision clarifies the legal hierarchy of leases and mortgages.
- It's crucial for both landlords and tenants to understand their obligations under this clause.
- Ensure all parties are aware of and agree to the terms outlined in the subordination provision.
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FAQ
Subordination is the tenant's agreement that its interest under the lease will be subordinate to that of the lender.Attornment is the tenant's agreement to become the tenant of someone other than the original landlord and who has now taken title to the property.
A subordinate clause (or dependent clause) is a clause that cannot stand alone as a complete sentence because it does not express a complete thought. Like all clauses, a subordinate clause has a subject and verb.
A subordinate clausealso called a dependent clausewill begin with a subordinate conjunction or a relative pronoun. Like all clauses, it will have both a subject and a verb. This combination of words will not form a complete sentence. It will instead make a reader want additional information to finish the thought.
There are three different kinds of subordinate clauses: adverb clauses, adjective clauses, and noun clauses. Each of these clauses are introduced by certain words.
A subordinate clause has a subject and a verb, but it cannot stand alone as a complete sentence. Let's look at some examples;When she was sick (she=subject; was=verb) Because mom said so (mom=subject; said=verb)
Subordination clauses in mortgages refer to the portion of your agreement with the mortgage company that says their lien takes precedence over any other liens you may have on your property.However, it's also possible to have other liens. You might have some placed by contractors until work is paid off.
Despite its technical-sounding name, the subordination agreement has one simple purpose. It assigns your new mortgage to first lien position, making it possible to refinance with a home equity loan or line of credit.
For example, in the sentence 'I played out until it went dark', the phrase 'until it went dark' is the subordinate clause because it requires additional information in order to make sense. Subordinate clauses contain a subject noun and a verb.
