What is a subordination agreement?

A subordination agreement is a legal document used in property law in Florida that can change the priority of one debt over another or a lien over another. In property law, liens are documents that give a creditor the right to take a property if the owner fails to pay a debt. A subordination agreement is an agreement between a property owner and two of their creditors, or between two creditors themselves, that changes the order in which the two creditors have the right to be paid. For example, if a property owner takes out a loan from one creditor and then decides to take out another loan from a different creditor, the first creditor can request that the new loan be subordinated to their loan. This means that the first creditor would have the right to be paid before the second creditor in the event that the property owner defaults on their payments. In Florida, a subordination agreement must be in writing, signed, and notarized for it to be legally binding. This agreement must be filed with the county in which the property is located. The agreement can also specify that the order of payments will only apply for a specific period of time. Subordination agreements are important in property law in Florida, as they help to ensure that creditors are able to be paid in the event of a default. It also helps to protect lenders from taking a loss due to the possibility of another lender being paid before them in the event of a foreclosure.

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What is a subordination agreement?

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