What Is A Landlord Subordination Agreement

- October 14, 2021

Understanding the basics of an owner`s subordination agreement will help you explain it better and can improve the chances of getting the owner`s signature. Owner subordination agreements or owner waivers can be a real thorn in the side of small business owners trying to qualify for SBA loans. Landlords may be reluctant to sign one of these agreements because they don`t want to lose their potential collateral claims in the event of your lease default. While a lender occupies the property, it is usually required that the lender pay rent to the landlord. However, it is important for lenders to check the language used by the landlord in relation to the amount of rent due. In some cases, landlords will require the lender to pay the rent due and due under the lease, which at first glance seems reasonable. However, a review of the lease can reveal different types and amounts of rent. In addition, lenders should ensure that they are only required to pay rent for the time when the lender actually owns the premises. The lender must ensure that it agrees with the rent paid and, if necessary, limits it. For more information on negotiating owner waivers, please contact Starfield & Smith, P.C. Lawyers at 215.542.7070 or email us at info@starfieldsmith.com.