Subordination Agreement of Deed of Trust
Overview of this form
The Subordination Agreement of Deed of Trust is a legal document that enables one lien holder to subordinate their deed of trust to another lien holder's claim. This agreement is essential when a property has multiple loans secured by liens, allowing for clear priority between lenders. By using this form, parties can ensure that one lien will take precedence over another, clarifying real estate financing arrangements.
Key parts of this document
- Identification of the parties involved in the agreement.
- Details of the original deed of trust being subordinated.
- Information about the deed of trust that will remain superior.
- Effective date of the subordination agreement.
- Space for the signatures of all parties and a notary acknowledgment.
Common use cases
This form should be used when a lender or lien holder wants to subordinate their existing lien on a property to another lender's lien. Scenarios for its use include refinancing, acquiring additional financing, or when changes in the priority of liens are necessary for completing a real estate transaction.
Who can use this document
- Property owners looking to refinance loans.
- Lenders wanting to establish lien priority for new loans.
- Real estate attorneys assisting clients with lien agreements.
Steps to complete this form
- Identify all parties involved, including lien holders and borrowers.
- Specify the details of the original deed of trust to be subordinated.
- Clearly state the lien that will maintain superior status.
- Enter the effective date of the agreement.
- Ensure all parties sign the agreement in the presence of a notary public.
Notarization requirements for this form
Notarization is required for this form to take effect. Our online notarization service, powered by Notarize, lets you verify and sign documents remotely through an encrypted video session, available 24/7.
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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
- Failing to include the correct legal descriptions of the property.
- Not obtaining all required signatures before notarization.
- Overlooking the effective date, leading to ambiguity about when the subordination takes effect.
Why complete this form online
- Easy to complete and customize for your specific situation.
- Access to reliable legal documents drafted by licensed attorneys.
- Convenient downloadable format allows you to keep a record easily.
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FAQ
A subordination clause or subordination agreement is used to lower the priority of a first recorded deed of trust or mortgage in favor of a later or junior recorded deed of trust or mortgage.
A Subordination Deed includes provisions where the junior creditor agrees not to be paid by the debtor until the senior creditor has been repaid in full.
The borrower (trustor) benefits the most from a subordination clause since this makes it easier to obtain an additional loan on their property. For example, the buyer of vacant land can obtain a construction loan more easily if the loan against the land will be subordinated to the construction loan.
A subordination agreement prioritizes collateralized debts, ranking one behind another for purposes of collecting repayment from a debtor in the event of foreclosure or bankruptcy. A second-in-line creditor collects only when and if the priority creditor has been fully paid.
A subordination clause or subordination agreement is used to lower the priority of a first recorded deed of trust or mortgage in favor of a later or junior recorded deed of trust or mortgage.
A subordination agreement is a legal document that establishes one debt as ranking behind another in priority for collecting repayment from a debtor. The priority of debts can become extremely important when a debtor defaults on payments or declares bankruptcy.
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.
