STG Subordination of Mechanic’s Lien Rights
This form should not be used if a comparable ALTA version is available. If a comparable ALTA version is available, the most current version of the ALTA form available in each state should be used, unless approved by a Stewart underwriter.
NOTE: THIS IS A SAMPLE FORM. PLEASE CONSULT UNDERWRITING COUNSEL PRIOR TO USING THIS FORM.
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.
STG Subordination of Mechanic’s Lien Rights
WHEREAS _______________________(“Owner”), is the owner of the following real property (“land”) in ___________________ (county, state), to-wit:
See attached Exhibit A
WHEREAS, Owner proposes to construct improvements on the land and has agreed, or intends to enter into an agreement (“the Contract”) with the General Contractor to furnish materials, to perform labor and to retain subcontractors as agent of Owner, incidental to said construction, for which the undersigned may have a statutory lien;
WHEREAS, Owner proposes to obtain a loan in the amount of $__________________ that will provide financing for the described construction on the land, and Owner has executed, or will execute a deed of trust (“the mortgage”) in favor of _________________________________ “(Lender)”, to secure the payment of that loan. The mortgage has been, or will be recorded as a lien upon the described land of the Owner.
WHEREAS, Stewart Title Guaranty Company (“Title Company”) and Lender are aware that the undersigned will or has performed work prior to the mortgage being recorded.
WHEREAS, Lender is unwilling to provide financing for the described construction on the land unless it has a mortgage to secure performance of the obligations of the Owner that is entitled to priority over all other liens, and Lender has applied to the Title Company for a policy of title insurance insuring the priority of the lien of the mortgage.
WHEREAS, Title Company is unwilling to insure the lien priority of the Lender unless the undersigned (referenced herein as “Subordinator”) agrees to unconditionally subordinate the statutory lien rights provided by Title 45, Chapter 5, Idaho Code that secure payment for labor and materials furnished for the described construction of improvements on the land, such that the lien of the Lender is prior to the lien rights of the General Contractor for all materials furnished and labor performed before and after the recordation of the mortgage.;
AND WHEREAS, the undersigned Subordinator intends by this document to induce the Lender to provide the described loan, and to induce the Title Company to issue a title insurance policy insuring the Lender against all claims of statutory lien rights by Subordinator.
NOW, THEREFORE, Subordinator agrees that the lien of the described mortgage shall be and at all times remain prior, paramount and superior to any statutory right of lien upon the land that Subordinator may now have or hereafter acquire, due to any improvements on said land performed by Subordinator, or performed by any subcontractors at the request of Subordinator. The Subordinator agrees that all liens and lien rights arising under or related to the Contract, all rights and remedies of Subordinator associated with such liens and lien rights, and all lien rights and remedies of those claiming by, through, or under the Subordinator, having arisen or arising hereafter are and shall at all times continue to be subject and subordinate in all respects to the Mortgage and to the lien thereof and to all renewals, modifications, spreaders, consolidations, replacements, and extension thereof, and to all sums secured thereby, including, but not limited to sums that may be advanced subsequent to the effective date hereof, with the same force and effect as if (a) the Mortgage had been executed, delivered, and recorded prior to the execution and delivery of the Contract, and (b) all work of improvement pursuant to the Contract had commenced subsequent to the execution, delivery, and recordation of the Mortgage.
This Subordination Agreement shall be effective if and when the herein described loan is closed and the undersigned has been paid in full for all work performed and materials furnished up until the recordation of the mortgage. Until the loan is closed and the undersigned is paid this amount in full, Title Company shall hold this Subordination Agreement in escrow.
Subordinator agrees that the Title Company may directly enforce the provisions of this Subordination Agreement in order to protect against its liability to the Lender resulting from the title insurance policy.
Nothing in this Subordination Agreement shall be construed to alter the right of Subordinator to a statutory lien upon the land, or the right of Subordinator to enforce a statutory lien against the Owner, or any other party, but such rights of Subordinator shall not alter the superior priority of the lien of the mortgage.
This Agreement shall be binding upon Subordinator, its successors and assigns and inure to the benefit of Lender and its successors and assigns.
The term “Lender” as used herein shall include the successors and assigns of Lender and any person, party, or entity that shall become the owner of the Premises by reason of a foreclosure of the Mortgage or the acceptance of a deed of assignment in lieu of foreclosure or otherwise. The term “Premises” as used herein shall mean the land, the improvements now or hereafter located thereon, and the estates therein encumbered by the Mortgage.
This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by Subordinator, accepted by the Lender, and consented to by Stewart Title Guaranty Company as insurers of the lien on the Mortgage as an encumbrance upon the Premises, which consent may be withheld in its sole discretion.
Subordinator acknowledges sufficient opportunity to examine the terms of the mortgage, note and agreements relating thereto.
DATED this __________day of ___________, 2014.
______________________________, its _________________________
State of ___________ )
County of _________ )
On this _______ day of _____________, 20______, before me, the undersigned, a notary public in and for said state, personally appeared _____________________, known to me to be the _____________ of the Corporation that executed this instrument and the person who executed the instrument on behalf of said Corporation, and acknowledged to me that such Corporation executed the same.
In witness whereof, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
Residing In: _________________________
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