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Real Estate Subordination Agreement Template for England and Wales

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Key Requirements PROMPT example:

Real Estate Subordination Agreement

"Need a Real Estate Subordination Agreement for a London office building where ABC Bank (senior lender) is providing £5M additional financing, and XYZ Finance (junior lender) needs to subordinate their existing £2M charge, to be completed by March 2025."

Document background
Real Estate Subordination Agreements are crucial in complex property financing structures where multiple lenders are involved. This document type is particularly relevant when additional financing is needed for a property that already has existing security interests. The agreement, governed by English and Welsh law, establishes clear priorities between different security interests, preventing future disputes and providing certainty to all parties. It typically includes detailed provisions about payment priorities, enforcement rights, and the circumstances under which the subordination applies.
Suggested Sections

1. Parties: Identification of all parties including Senior Lender, Junior Lender, and Property Owner

2. Background: Context of existing security interests and purpose of subordination

3. Definitions: Key terms including Senior Debt, Junior Debt, Property, Security Documents

4. Subordination Provisions: Core terms establishing priority between security interests

5. Representations and Warranties: Statements of fact and assurances from parties

6. Covenants: Ongoing obligations of parties

7. Enforcement: Rights and procedures for enforcing security interests

Optional Sections

1. Standstill Provisions: Terms preventing junior creditor enforcement for specified period. Include when junior creditor rights need to be temporarily suspended

2. Turnover Provisions: Obligations to pay over received amounts to senior creditor. Include when there's risk of incorrect payment order

3. Further Assurance: Obligation to execute additional documents if needed. Include when future documentation might be required

Suggested Schedules

1. Property Description: Detailed legal description of the secured property

2. Existing Security Documents: List and details of all security documents being subordinated

3. Form of Notice: Template for notifying relevant parties of the subordination

4. Permitted Payments: Schedule of payments allowed to junior creditor despite subordination

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Law of Property Act 1925: Primary legislation governing property law in England and Wales, particularly sections dealing with legal estates, charges, priorities, and registration of interests in land

Land Registration Act 2002: Key legislation covering rules regarding priority of registered charges, requirements for registration of subordinate interests, and notice requirements

Insolvency Act 1986: Legislation governing the impact on creditor priorities and treatment of secured interests in insolvency scenarios

Companies Act 2006: Corporate legislation relevant for company parties, including requirements for execution of documents and corporate authority requirements

Land Registration Rules 2003: Secondary legislation detailing procedural requirements for registration, including forms and notices

Financial Services and Markets Act 2000: Relevant when any party is a regulated entity, governing financial services regulations

Common Law Doctrine of Priorities: Legal principles established through case law regarding the order and priority of different interests in property

Contractual Interpretation Principles: Common law rules governing how courts interpret and enforce contractual terms

Equitable Principles: Principles of equity relating to charges and security interests in property

FCA Regulations: Financial Conduct Authority regulations applicable to regulated entities and financial arrangements

Financial Collateral Arrangements Regulations: Specific regulations governing financial collateral arrangements and their enforcement

Consumer Protection Regulations: Regulations protecting consumer interests, applicable when any party is a consumer

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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