What is mortgage subordination?
When a mortgage holder subordinates a mortgage to a conservation easement they agree to allow the easement to be first in the chain of title, so that in the event of a foreclosure, the integrity of the easement remains intact. In determining interests in a parcel of land, the general legal rule is “first in time, first in right.” Thus, where a mortgage is recorded prior to a conservation easement, the interests of the lender will be given priority over the interest of the easement holder in the event of foreclosure. As such, the easement will be extinguished and the lender will take title to the land free and clear of the easement encumbrance.The lender’s “first in time” priority interest may be altered by a contractual agreement called a mortgage subordination. In this agreement, the lender consents to subordinate its mortgage to the conservation easement, even though the mortgage was recorded prior to the conservation easement in the public land records. Thus, in the event of foreclo
Related Questions
- A conservation agreement, also called a conservation easement, is a legal agreement that permanently restricts the development or use of land to ensure the protection of its conservation values. What is stewardship?
- How is the value of the agricultural land conservation easement determined, and by whom?
- What is mortgage subordination?
