Subordination
An agreement in which a party with a prior claim on property agrees that their claim ranks below a new lien or interest.
Subordination is most commonly encountered in two real estate contexts. First, mortgage subordination: when a property owner refinances their first mortgage, any junior lien holders (second mortgage, HELOC) typically must agree to subordination — confirming their liens remain in a junior position to the new first mortgage. Without subordination agreements, the new lender would have a junior lien because the existing liens were recorded first.
Second, lease subordination: lenders typically require that existing leases be subordinate to their mortgage, meaning that if the lender forecloses, the leases can be terminated. This is balanced by non-disturbance agreements (the lender agrees not to disturb tenants who are current on rent) and the SNDA structure (Subordination, Non-Disturbance, and Attornment). For commercial real estate, SNDA agreements among lenders, landlords, and tenants are critical documents to review — they determine tenant rights in a foreclosure scenario and are a major area of negotiation in commercial lease transactions. Document intelligence applied to SNDA agreements can extract the precise subordination, non-disturbance, and attornment provisions with page citations.
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Indemnification
A contractual obligation where one party agrees to compensate the other for specified losses or damages.
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A contract clause that frees parties from obligations when extraordinary events beyond their control prevent performance.
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A legally enforceable agreement between two or more parties that creates mutual obligations.
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