What is a Subordination Agreement?

            Liens against property (such as mortgage liens, tax liens, judgment liens, etc.) in Texas are given priority either by statute or by filing date.  The general rule of priority is “first in time, first in line.”  Statutory provisions may give some liens, such as tax liens or purchase money liens, special priority.  Occasionally, a lien holder who is in a better position may agree to take a position behind a new lien holder.   This agreement is called a Subordination Agreement.  The Subordination Agreement sets out each of the liens involved in the agreement, as well as a description of the property that is collateral for both liens and the consideration that the subordinating lender accepted in order to complete the agreement. 

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