Real Estate Subordination Agreements are essential in Saudi Arabian real estate financing transactions where multiple creditors hold security interests over the same property. This document type is particularly relevant when restructuring existing financing arrangements or introducing new senior debt facilities. The Real Estate Subordination Agreement must comply with Saudi Arabian law, including the Real Estate Registration Law and Shariah principles, and requires proper registration with relevant authorities. It is commonly used in commercial real estate developments, Islamic financing structures, and property investment projects where multiple tiers of financing exist. The agreement includes detailed provisions on the ranking of security interests, enforcement procedures, and the rights and obligations of all parties involved, while ensuring compliance with local regulatory requirements and Islamic finance principles.
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1. Parties: Identification of all parties to the agreement, including the senior creditor, subordinated creditor, and property owner
2. Background: Recitals explaining the existing security interests, their priority, and the reason for subordination
3. Definitions: Definitions of key terms used throughout the agreement, including references to the relevant security documents and property description
4. Subordination Agreement: Core provisions establishing the subordination of rights and priorities between the creditors
5. Representations and Warranties: Statements by each party confirming their authority, validity of their security interests, and other key facts
6. Covenants: Ongoing obligations of the parties regarding the subordinated rights and related matters
7. Registration and Notices: Requirements for registering the subordination agreement and providing notices to relevant authorities
8. Term and Termination: Duration of the subordination arrangement and circumstances under which it may be terminated
9. Governing Law and Jurisdiction: Confirmation of Saudi law application and jurisdiction for disputes
10. Execution: Signature blocks and attestation requirements under Saudi law
1. Further Assurance: Additional commitments to take necessary actions to give effect to the subordination, used when specific future actions may be needed
2. Currency Provisions: Provisions dealing with multiple currencies, needed when the secured obligations are in different currencies
3. Power of Attorney: Authorization for the senior creditor to act on behalf of the subordinated creditor in certain circumstances, used in more complex arrangements
4. Assignment and Transfer: Provisions governing the ability to transfer rights under the agreement, needed when transfers are contemplated
5. Shariah Compliance: Specific provisions confirming compliance with Islamic law principles, used when parties require explicit confirmation
6. Language: Provisions specifying which language version prevails, needed when dual-language versions are prepared
1. Property Description: Detailed legal description of the real estate property subject to the security interests
2. Existing Security Documents: List and copies of the security documents being subordinated and those taking priority
3. Form of Notice: Template for notices to be given to relevant authorities regarding the subordination
4. Registration Requirements: Checklist of registration requirements and forms for Saudi authorities
5. Powers of Attorney: Forms of any required powers of attorney
6. Corporate Authorizations: Copies of corporate approvals and authorizations for entering into the agreement
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