Subordination Agreement Template for Canada

A Subordination Agreement changes the priority order of different debts or claims against the same property. When multiple lenders have security interests in the same asset, this agreement lets one creditor voluntarily step back and give another creditor first rights to collect payment or seize collateral.

In Canadian lending practices, these agreements often come into play when homeowners refinance their mortgages or when businesses need additional financing. For example, a second mortgage lender might agree to subordinate their claim to a new first mortgage lender, making the refinancing possible. The agreement must follow provincial property and security laws, and lenders typically register it with the appropriate land registry office.

Use a Subordination Agreement when you need to rearrange the priority of debts or claims against a property. Common situations include refinancing a home mortgage, where the existing second mortgage holder must agree to stay behind a new first mortgage lender. Business owners also need these agreements when seeking additional financing while maintaining existing credit lines.

The timing matters most during property refinancing, business expansion, or debt restructuring. Canadian lenders typically require these agreements before approving new loans on properties with existing mortgages or liens. Getting all creditors to sign early in the financing process helps avoid delays in closing deals and ensures proper registration with provincial land offices.

• Land Subordination Agreement: Used specifically for real estate transactions, prioritizing mortgage claims between multiple lenders on the same property
• Deed Of Subordination Of Directors Loan: Ranks director loans as lower priority than other company debts, often required by banks for corporate financing
• Intercreditor And Subordination Agreement: Manages complex arrangements between multiple creditors, establishing payment priorities and enforcement rights
• Non Disturbance Agreement: Protects tenants' lease rights when property ownership changes due to foreclosure
• Attornment And Non Disturbance Agreement: Combines tenant protection with formal recognition of a new landlord's rights

• Banks and Financial Institutions: Act as primary lenders and often require Subordination Agreements before approving new loans or refinancing existing ones
• Property Owners: Sign these agreements when seeking additional financing or restructuring existing loans on their properties
• Corporate Directors: May need to subordinate their personal loans to the company behind other creditors' claims
• Real Estate Lawyers: Draft and review the agreements to ensure compliance with provincial regulations and protect clients' interests
• Secondary Lenders: Agree to take lower priority positions on debt claims, often including private lenders, credit unions, or investment companies

• Property Details: Gather complete legal descriptions, addresses, and registration numbers for all affected properties
• Loan Information: Collect details of all existing and new loans, including loan amounts, terms, and registration dates
• Party Information: Document full legal names and contact details of all lenders, borrowers, and guarantors involved
• Priority Structure: Clearly outline the new ranking order of all debts and security interests
• Registration Requirements: Check provincial land registry office requirements for proper recording
• Document Generation: Use our platform to create a legally-sound agreement that includes all mandatory elements and meets provincial standards

• Party Identification: Full legal names and addresses of all lenders, borrowers, and any guarantors involved
• Property Description: Detailed legal description of the property or assets subject to subordination
• Debt Details: Specific information about all relevant debts, including amounts, dates, and registration numbers
• Priority Terms: Clear statement of new priority rankings and any conditions affecting the subordination
• Enforcement Rights: Outline of each party's rights regarding collection and enforcement
• Governing Law: Explicit reference to applicable provincial laws and jurisdiction
• Execution Requirements: Proper signature blocks, witness provisions, and notarization requirements if needed

A Subordination Agreement differs significantly from a Control Agreement. While both deal with creditor rights, they serve distinct purposes in Canadian finance and lending.

• Primary Purpose: Subordination Agreements rearrange the priority of existing debts, while Control Agreements establish a lender's rights to access and control deposit accounts or investment assets
• Timing of Use: Subordination Agreements typically come into play during refinancing or new loan situations, whereas Control Agreements are set up at the start of a lending relationship
• Party Relationships: Subordination involves multiple lenders agreeing to priority rankings, while Control Agreements are three-way arrangements between a lender, borrower, and account-holding institution
• Legal Effect: Subordination changes existing legal rights between creditors, while Control Agreements create new rights over specific accounts without affecting other creditors' positions