Types Of Subordination Agreements

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why subordination is used in some financial transactions subordination agreements are the most common in the field of mortgages. If a person borrows a second mortgage, that second mortgage has less priority than the first mortgage, but these priorities can be disrupted by refinancing the original loan. In the enforceable subordening agreement, a subordinate party undertakes to subordinate its interest to the interest of the guarantee of another subsequent instrument. Such an agreement can be difficult to implement afterwards, as it is only a promise to reach an agreement in the future. For an act of subsedation of precedent, see previous: Single Unsecured Senior Lender-Single Unsecured Junior Lender.