Subordination agreement question


#1

If I ask the customer service at title company to search for loans. ?Am I able to see the subordination agreements??


#2

Hi Sue,

The subordination agreement is a recorded legal document and it would be
recorded at the same time as a new Deed of Trust.?

You can usually search by name and document type at the
county. You may also be able to get someone in customer service at the title company to pull up the title plant chain and have a look. Finally you might want to
consider ordering a preliminary title report on the property. Expensive if it
doesn’t end up going to sale, but far cheaper than missing something.


#3

Adding to Patrice’s comment … when subordination agreements exist there is virtually always good rationale as to why they are in place. The most common instance is when the same lender is making a second large loan … e.g. making a ‘ostensible’ 2nd position loan that has a greater payoff $ amount than their ‘outstanding’ (non-reconveyed) 1st position loan. The subordination agreement would move the larger loan into a senior priority position. Yet, even when there are different lenders involved … if/when you see a ‘large loan’ – bigger than a foreclosing 1st – there’s a decent chance that the bigger loan made sure they were in senior position (if not by recording date … then via subordination agreement). But you never know … so it always pays to triple check loan position.?

The sad thing to see is when a private party (sometimes a friend of the distressed owner/borrower) comes in to make a ‘bailout’ loan, virtually always in ‘junior position.’ Those well intended friends are vulnerable to being ‘wiped out’ (no security). I saw one instance where a small dental office pension plan (dentist as trustee) made a $500K junior loan and the dentist had to come to the auction to ‘defend’ … he bought the foreclosing 1st at trustee sale to avoid being wiped out. He paid $820K for the 1st DOT on a property worth about the same ($800K give or take). So his pension plan’s total investment in the property was $1.3+ million … now a very long-term hold.?