What is a subordination agreement?

A subordination agreement is a legal document in Washington state that establishes the priority of interests in a property. When two or more parties have an interest in the same property, a subordination agreement determines which comes first in the event of a dispute. For example, a bank may have a mortgage on a house, and another lender may provide a loan to the homeowner for some other purpose. The subordination agreement would determine which of the two loans had first priority on the house if the homeowner failed to make payments. The subordination agreement is important in Washington, because it ensures that all parties interested in the property clearly understand their rights and responsibilities. This can help to avoid disputes and litigation. The agreement is usually governed by state law and is binding when it is signed by all of the parties involved. It is also important to note that subordination agreements can be amended, revoked, or replaced, but only by all of the parties involved. In Washington, subordination agreements are necessary when a secured interest takes priority over another interest. These agreements are not required when unsecured interests take priority over another interest, as they are usually given priority by law. Subordination agreements can also be used in other contexts, such as when two people have competing interests in a company.

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