What is a subordination agreement?

A subordination agreement is a legal contract between two parties in which one party agrees to put their right to payment after the right of the other party. This means that one party is subordinated to the other when it comes to repayment. In the context of property law in Kansas, a subordination agreement is often used in mortgages. It can be used if a lender wants to offer a homeowner a second mortgage. The first mortgage lender may require the homeowner to enter into a subordination agreement in order to protect their right to repayment. In this case, the second mortgage lender is subordinated to the first mortgage lender and their right to repayment is second in line. This ensures that the first mortgage lender will be repaid before the second mortgage lender. Subordination agreements are also used in cases where the loan is secured by a lien on the property. The lien is subordinated to the loan, meaning that the loan will be paid first if the property is sold. Subordination agreements are important tools in property law in Kansas that help ensure the rights of lenders are protected.

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