Real Estate. States which use a recording system have recording statutes which fall into one of … In most cases, the deed with the earliest filing date will receive full repayment after default or foreclosure before any of the other subordinate deeds of trust receive repayment. If a property has more than one deed and the owner wishes to sell the property, the order of the deeds may come into play. 4. This article was written by Legal Beagle staff. A “Deed of Trust”, or “Trust Deed”, is the document that secures a loan on a piece of property. Reviewed by: Michelle Seidel, B.Sc., LL.B., MBA. The filing date primarily affects the order a deed will receive repayment in the event of a default or foreclosure. This becomes especially important when refinancing a deed of trust. The subordination agreement will allow the new refinanced loan to hold the primary lien position. The agreement must be acknowledged by a notary so it can be recorded in the official county records. Secured and Unsecured Notes. For example, the filing date of the second deed of trust on a property is more recent than the property’s first deed of trust. Generally, holders of subordinate liens will not agree to subordinate deeds of trust. If such a clause is in place and one member of the borrowing group becomes insolvent, other intra-group creditors cannot make any claim in the insolvent's estate until the bank has been paid out in full. I wonder if the title company that insured the third trust deed picked up the subordination clause buried in the CC&Rs. A deed of trust transfers legal title of a property to a trustee. Legal Beagle: How to Fill Out the Deed of a Trust to Secure Assumption. Legal Beagle: What Is a Second Trust Deed? The Note secured by this deed of trust is given in part payment for improvements on the Property that Lender has agreed to make for Grantor under a mechanic’s lien contract of even date between Grantor as owner and Lender as contractor creating a lien against the Property to secure the Note. To subordinate a loan a licensee must: provide a Deed of Subordination, in triplicate, executed by the debtor and the lender, to … Mechanic’s Lien Clause. All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. Deed of subordination. Who benefits from a subordination clause in a deed of trust? STATUS. A subordination clause controls or adjusts the priority of mortgage loans. With a subordination agreement, the current holder of the second deed has to agree to subordinate the deed so that you can refinance your loan. The trust deeds are not paid proportionally; The First Trust Deed is paid off in full before the holder of the Second Trust Deed gets a penny. The only exception to the filing date rule is if one of the subordinate deeds of trust has signed a subordination agreement changing the order of the lien’s priority. The Plan consists of this Deed and the attached rules and Appendices. n. a written contract in which a lender who has secured a loan by a mortgage or deed of trust agrees with the property owner to subordinate the first loan to a new loan (thus giving the new loan priority in any foreclosure or payoff). This trustee holds the legal title to the property as security for a loan between a lender and a borrower. The Deed Book _____, Page of the original mortgage. However, if you have multiple deeds of trust on your property and want to refinance, the subordination agreement is a legal alternative that you may wish to pursue. 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