WHAT IS A SUBORDINATION AGREEMENT?

A Subordination Agreement in a lease is a generally accepted clause by the tenant about the premises being subject to any recorded mortgage or deed of trust lien.  Additionally, all existing recorded restrictions against the property and the landlord are given the power to subordinate the tenant’s interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises in the future.

Additionally, the Landlord typically needs to subordinate to the tenant’s lender as well as a requirement for a lender to lend money to the tenant for its business.