A Rhode Island Subordination Agreement — Lien is a legal document that establishes the priority of multiple liens on a property. This agreement is commonly used in real estate transactions where there are multiple creditors involved. In Rhode Island, there are two main types of subordination agreements — lien: general subordination agreement and specific subordination agreement. 1. General Subordination Agreement: This type of agreement involves a debtor who has more than one loan secured by the same property. By signing a general subordination agreement, the debtor agrees that the priority of the loans will be rearranged, giving one creditor priority over another. Typically, this is done to secure additional financing or to satisfy the requirements of a new lender. For example, if a homeowner has an existing mortgage and wants to take out a home equity line of credit, the existing mortgage lender may require a general subordination agreement to ensure their lien remains in first position. 2. Specific Subordination Agreement: This type of agreement is used when a lien holder agrees to subordinate their lien to a specific creditor or loan. It enables the lender to advance the priority of their lien above other existing liens on the property. For instance, if there is a dispute over the priority of two liens, the lien holder with the lower priority may agree to sign a specific subordination agreement, acknowledging the higher priority of the other lien. In both types of subordination agreements, it is crucial to clearly outline the terms and conditions of the subordination, including the effective date, the parties involved, the description of the liens being subordinated, and any other relevant details. It is highly advisable to consult with an experienced attorney to draft or review a subordination agreement to ensure its legality and enforceability. In summary, a Rhode Island Subordination Agreement — Lien is an essential legal tool that helps establish the hierarchy of multiple liens on a property. Whether it is a general subordination agreement or a specific subordination agreement, these documents play a pivotal role in real estate transactions involving multiple creditors or disputing lien priorities.
Rhode Island Subordination Agreement - Lien
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