SMH Commercial Real Estate

                  A Commercial Brokerage Practice Since 1992

Subordination

Any properly recorded lien or claim against property is superior in rights to those of a tenant/grantee, even though a tenant may have properly executed a bi-lateral conveying instrument with the property owner.  However, occupancy and recordation may in certain instances assert a prior claim.  A mortgage made after the execution of a lease for example, would therefore be subordinate to the lease.  Leases are often times subordinate to subsequent mortgages up to a certain amount; this provision allows the landlord to increase an existing mortgage.  A building site by contrast under which a tenant proposes to construct substantial improvements may be negotiated with an investor-landlord to subordinate the fee ownership position to the proposed mortgage.

 

 


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