This office lease is subject and subordinate to all ground or underlying leases and to all mortgages which may affect the lease or the real property of which demised premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages. This clause shall be self-operative.
North Dakota Subordination Provision refers to a legal concept utilized in various financial agreements and contracts. It determines the priority of different claims or interests against a property or asset in case of default, foreclosure, or bankruptcy. By incorporating a subordination provision, parties involved in a transaction prioritize and establish a hierarchy of rights or liens, ensuring orderly distribution of proceeds in case of default. In North Dakota, there are primarily two types of subordination provisions commonly used: Mortgage Subordination and Lease Subordination. 1. Mortgage Subordination: This type of subordination provision often comes into play when a borrower wishes to refinance an existing mortgage. Lenders who hold the original mortgage may require a subordination provision to secure their priority position in the event of default, allowing the new lender's mortgage to take precedence over the old mortgage. By incorporating this provision, the borrowers assure the new lender that their lien will be superior and will be cleared before the new mortgage is enforced. 2. Lease Subordination: Lease subordination provisions are observed when a landlord or property owner grants a lease on a property that is subject to an existing mortgage. In such cases, the lender may insist on a lease subordination provision to maintain its priority rights if the property faces foreclosure. This provision ensures that the lender's mortgage will take precedence over any lease rights, providing the lender the ability to terminate a lease if necessary. Lease subordination protects the lender's interests and provides assurance to potential lenders in case of default. In both cases, subordination provisions document the respective rights, priorities, and obligations of the parties involved. They set clear guidelines regarding the distribution of funds and property ownership hierarchy, providing security to lenders and maintaining order in financial transactions. It is important to consult with legal professionals experienced in North Dakota real estate and finance laws when drafting or reviewing agreements containing subordination provisions.
