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Subordination Agreement Template

Used 4,885 times

A subordination agreement is a legal instrument that lists loans or debts in the order of priority. You can create a contract that safeguards both parties using the PandaDoc Subordination Agreement Template.

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  3. Subordination Agreement Template

Subordination Agreement Template

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Prepared for:


Prepared by:


This Subordination Agreement (the "Agreement") is entered into as of [Document.CreatedDate] (the "Effective Date") by and between [Creditor.FirstName][Creditor.LastName] (the "Creditor") and [Borrower.FirstName][Borrower.LastName] (the "Borrower"), referred to herein collectively as the "Parties."

1. Purpose of the Agreement

The Parties enter into this Agreement to evidence that the Creditor will subordinate its interest in the subject Collateral (as defined herein) to the Borrower.

2. Definition of Terms


Collateral means all real and personal property described in a particular note dated (state the date) (the "Note") from Borrower to Creditor, including but not limited to all proceeds generated from such Collateral.


Lien means any security interest, mortgage, lien, or other encumbrance granted by the Borrower in favor of the Creditor as outlined in the Note.

3. Subordination of Interest

3.1 The Creditor hereby agrees to subordinate its lien and interest in the Collateral to all liens or security interests that may be created by the Borrower, concerning such Collateral, after the date of this Agreement.

3.2 The Creditor agrees that its lien and interest in the Collateral will not be superior to any liens or security interests created by the Borrower after the date of this Agreement.

3.3 The Borrower agrees to provide written notice to the Creditor if it creates any liens or security interests in the Collateral after the date of this Agreement.

4. Miscellaneous

4.1 Representations & Warranties

4.1.1 Both sides are confident and committed to upholding the requirements stated in this Agreement, ensuring that all necessary authority is granted.

4.1.2 Both Parties agree that this Agreement is consistent with any prior commitments or agreements they may have established with external parties.

4.1.3 Both Parties vow to abide by all applicable laws, regulations, and orders while executing this Agreement.

4.1.4 Both parties attest and guarantee that all information presented in this Agreement or any related documents executing this Agreement is entirely accurate and truthful.

4.2 Liability

4.2.1 The Creditor hereby releases, waives, and forever discharges the Borrower from all claims, liabilities, and causes of action of any nature whatsoever (including attorneys' fees and costs) arising out of or related to the exercise by the Borrower of its rights under this Agreement.

4.2.2 The Borrower agrees to fully indemnify and hold harmless the Creditor from any claims, liabilities, or causes of action related to its activities under this Agreement.

4.3 Dispute Resolution

4.3.1 To cultivate a productive and peaceful relationship, both Parties agree to listen to each other's perspectives during conflicts and aim for solutions that benefit everyone involved.

4.3.2 If the dispute escalates, it shall be under (state what the Agreement shall be construed and governed by).

4.4 Severability

4.4.1 To guarantee that the conditions outlined here are fulfilled, any clause not effective or able to be enforced shall be revised to accomplish both Parties' desired outcomes.

4.4.2 The remainder of this Agreement shall remain in full force and effect under its terms.

4.5 Confidentiality

4.5.1 The Parties pledge to guardedly safeguard any information received from one another in correlation with this Agreement, thereby assuring the security of confidential data.

4.5.2 Both parties are legally obliged to maintain all shared information confidential and will only use it with explicit authorization.

4.5.3 Both entities hereby agree to keep all confidential information private unless required by law or necessary for the successful completion of this Agreement.

4.6 Amendment

4.6.1 For this Agreement to be legally valid, all alterations or modifications must be explicitly noted in writing and signed off by each Party.

4.6.2 All verbal changes are not recognized as valid.

4.7 Force Majeure

4.7.1 In the event of force majeure that impedes either Party from completing their contractual responsibilities, this shall not be considered a breach.

4.7.2 Force majeure encompasses various unforeseeable circumstances, from celestial events and pandemics to man-made conflicts and natural disasters such as floods.

4.7.3 During any force majeure event, both parties may be excused from their contractual obligations during these trying times.

4.7.4 After the inevitable circumstances have been addressed, all parties must swiftly and diligently fulfill their commitments.

4.8 Jurisdiction

4.8.1 This Agreement shall be construed and governed by (state what the Agreement shall be construed and governed by).

4.8.2 The Parties agree to submit to (state what the Agreement shall be construed and governed by) for any action or proceeding arising under this Agreement.

4.9 Term and Termination

4.9.1 This Agreement will become valid on (state the date) and remain intact until (state the date).

4.9.2 To terminate this Agreement before it's due, either Party must provide written notice to the other at least (state timeframe) before their desired termination date.

The Parties acknowledge that they have read and understood this Agreement, agreeing to its terms as of [Document.CreatedDate]:





Subordination Agreement Template

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