Definition
Subordination
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Subordination occurs when a lien holder agrees to a lower priority claim against the asset (property) which allows another creditor to take it’s place.
When default and foreclosure happens, creditors will be in a queue that determines who gets repaid first with the proceeds of the sale.
The party with the first lien will have the debt cleared first, followed by the second if there’s any balance remaining and so on.
In regards to home loans, even though the practice of subordination is common in western markets, it is not common in Singapore simply because it will be tough to find a bank here that will agree to have it’s lien subordinated.
Do consult the advice of the lawyer when in doubt.
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