Subordination Agreement - Short Form

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This Subordination Agreement (Short Form) is between a debtor and two creditors, one of which agrees to subordinate its interests to the other. This agreement sets out all pertinent terms and will prove useful in the event the debtor defaults.

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This Subordination Agreement (Short Form) is between a debtor and two of its creditors wherein one (the original creditor) agrees to subordinate its security to another creditor (new creditor) who agrees to provide a loan to the debtor. This agreement sets out the names of the debtor and the creditors, amount of new loan and the date of the new loan agreement. It also sets forth the agreement that original creditor will subordinate its interests in favor of the new creditor. It is imperative that this agreement be memorialized in writing. A written Subordination Agreement will prove invaluable in the event there are future disagreements or misunderstandings in the event the debtor defaults on the loan.

This Subordination Agreement (Short Form) contains the following provisions:
  • Parties: Sets forth the names of the new lender, the debtor and the original creditor;
  • Loan Information: Sets forth the date and amount of the loan which the new creditor has authorized;
  • Consent/Subordination: Creditor agrees to establishment of the security held by the new creditor and consents to subordinate its interests in favor of the new creditor;
  • Signatures: This agreement must be signed and dated by the original creditor.

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This attorney-prepared packet contains:
  1. General Instructions
  2. Subordination Agreement (Short Form)
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Subordination Agreement
(Short Form)

 

 

TO:   [Name of Lender] (the “New Creditor”)
WHEREAS:
(A)   [Name of Debtor] (the “Debtor”) is indebted to [Name of Creditor] (the “Creditor”), (such indebtedness being herein referred to as the “Creditor Indebtedness”), and as security therefor, the Creditor has taken security over all of the assets and undertaking of the Debtor (the “Creditor Security”);
(B)   The New Creditor has agreed to provide to the Debtor a loan in the principal amount of $[Amount of Loan] pursuant to a loan agreement dated [Date of Loan Agreement] (the indebtedness under such loan agreement being herein referred to as the “New Creditor Indebtedness”), and as security therefor, the New Creditor has taken security over all of the assets and undertaking of the Debtor (the “New Creditor Security”);
(C)   The Creditor has agreed to the establishment of the New Creditor Security and to subordinate the Creditor Security to the New Creditor Security, upon the terms and conditions hereinafter contained;
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Creditor agrees as follows:
1.   Consent. The Creditor hereby consents to the establishment of the New Creditor Security.
2.   Subordination.The Creditor hereby subordinates the Creditor Security to the New Creditor Security, up to the aggregate amount of the New Creditor Indebtedness.
3.   Disentitlement of Proceeds. Nothing herein contained shall be construed as entitling the New Creditor to receive any proceeds from any of the property or assets of the Debtor in respect of which the New Creditor does not have any security, in respect of which the security is invalid and unenforceable as against third parties or in respect of which the obligation secured by the security is invalid or unenforceable. If any person shall have a valid claim to proceeds of realization from any of the property or assets of the Debtor in priority to or on a parity with the New Creditor, then this Agreement shall not apply so as to diminish the rights (as such rights would have been but for this Agreement) of the Creditor to the proceeds of realization from such property or assets. Nothing contained in this Agreement shall be construed as conferring any rights upon the Debtor or any third party. The priorities provided for in this Agreement shall be effective notwithstanding any matter or thing including, without limitation, the order of any bankruptcy court having jurisdiction as to the entitlement of the New Creditor or the Creditor to any proceeds.
4.   Default by Debtor. In the event that the Debtor defaults in payment of any of the Creditor Indebtedness, then the Creditor agrees to notify the New Creditor of such default prior to realizing under the Creditor Security, provided however, that failure to so notify the New Creditor will not affect any actions or proceedings taken by the Creditor in connection with such default.
5.   Governing Law and Attornment. This Agreement shall be governed by and construed in accordance with the laws of the State of [State (ie. California)].
 
DATED this _____ day of ___________________, 20_____
 
 
 
[NAME OF CREDITOR]
 
 
 
 
Per:
 
 
 
 
Name:   
Title:         
 
Number of Pages4
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#28647
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Subordination Agreement
(Short Form)

 

 

TO:   [Name of Lender] (the “New Creditor”)
WHEREAS:
(A)   [Name of Debtor] (the “Debtor”) is indebted to [Name of Creditor] (the “Creditor”), (such indebtedness being herein referred to as the “Creditor Indebtedness”), and as security therefor, the Creditor has taken security over all of the assets and undertaking of the Debtor (the “Creditor Security”);
(B)   The New Creditor has agreed to provide to the Debtor a loan in the principal amount of $[Amount of Loan] pursuant to a loan agreement dated [Date of Loan Agreement] (the indebtedness under such loan agreement being herein referred to as the “New Creditor Indebtedness”), and as security therefor, the New Creditor has taken security over all of the assets and undertaking of the Debtor (the “New Creditor Security”);
(C)   The Creditor has agreed to the establishment of the New Creditor Security and to subordinate the Creditor Security to the New Creditor Security, upon the terms and conditions hereinafter contained;
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Creditor agrees as follows:
1.   Consent. The Creditor hereby consents to the establishment of the New Creditor Security.
2.   Subordination.The Creditor hereby subordinates the Creditor Security to the New Creditor Security, up to the aggregate amount of the New Creditor Indebtedness.
3.   Disentitlement of Proceeds. Nothing herein contained shall be construed as entitling the New Creditor to receive any proceeds from any of the property or assets of the Debtor in respect of which the New Creditor does not have any security, in respect of which the security is invalid and unenforceable as against third parties or in respect of which the obligation secured by the security is invalid or unenforceable. If any person shall have a valid claim to proceeds of realization from any of the property or assets of the Debtor in priority to or on a parity with the New Creditor, then this Agreement shall not apply so as to diminish the rights (as such rights would have been but for this Agreement) of the Creditor to the proceeds of realization from such property or assets. Nothing contained in this Agreement shall be construed as conferring any rights upon the Debtor or any third party. The priorities provided for in this Agreement shall be effective notwithstanding any matter or thing including, without limitation, the order of any bankruptcy court having jurisdiction as to the entitlement of the New Creditor or the Creditor to any proceeds.
4.   Default by Debtor. In the event that the Debtor defaults in payment of any of the Creditor Indebtedness, then the Creditor agrees to notify the New Creditor of such default prior to realizing under the Creditor Security, provided however, that failure to so notify the New Creditor will not affect any actions or proceedings taken by the Creditor in connection with such default.
5.   Governing Law and Attornment. This Agreement shall be governed by and construed in accordance with the laws of the State of [State (ie. California)].
 
DATED this _____ day of ___________________, 20_____
 
 
 
[NAME OF CREDITOR]
 
 
 
 
Per:
 
 
 
 
Name:   
Title:         
 

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