Subordination Agreement Legal Meaning and Definition

Here is a simplified definition of the legal term Subordination Agreement.

Subordination Agreement (noun):

This is a legal contract made between a property owner and a lender who holds a lien (such as a mortgage or charge) on the property. In this agreement, the lender agrees to lessen their claim rights on the property in favor of a new claim, lien, or mortgage. Though this does mean the lender gives up top priority, it must be recognized by a notary and recorded.