A California Security Interest Subordination Agreement is a legal document that outlines the priority of security interests in collateral to determine the order of repayment during bankruptcy or default situations. This agreement is particularly significant in the context of lending and borrowing. Keywords: 1. California: The agreement specifically refers to the legal regulations and requirements within the state of California. It is important to note that laws and regulations may vary between states. 2. Security Interest: Refers to a legal claim or interest that a lender has on a borrower's property or assets to secure a loan or to ensure repayment. 3. Subordination Agreement: A written contract that establishes the priority ranking of different creditors' security interests in the collective assets of a debtor. 4. Collateral: Assets or property that a borrower pledges as security for a loan, which can be seized by the lender in case of default. 5. Priority: The order in which various creditors will be repaid in the event of a debtor's default or bankruptcy. 6. Bankruptcy: The legal status of an individual or organization that is unable to repay their debts to creditors. 7. Default: The failure to meet the terms and conditions of a loan or financial agreement. Different types of California Security Interest Subordination Agreements: 1. First Lien Subordination Agreement: This type of agreement arises when a new loan is secured by collateral that currently has an existing first lien. In this case, the first lien holder must agree to subordinate their priority to the new lender. 2. Second Lien Subordination Agreement: Here, the collateral already has an existing first lien, and a new loan is secured by a second lien. The first lien holder and the second lien holder must enter into an agreement to establish the priority of their respective claims. 3. Intercreditor Agreement: Sometimes used interchangeably with a security interest subordination agreement, an intercreditor agreement outlines the priority of multiple lenders and their rights in a loan transaction, often involving mezzanine financing or multiple tiers of debt. These agreements serve to clarify the rights and obligations of lenders in the event of default, ensuring an orderly repayment process and protecting the interests of all parties involved. It is essential for lenders and borrowers to consult with legal professionals to draft and execute these agreements properly.