What does this MEAN?? SUBORDINATION: The Lease is subordinate to all existing......

[Christopher Veljkovic]

Hey BP,

Over looking my lease agreement  and came across this:

SUBORDINATION: The Lease is subordinate to all existing and future mortgages, deeds of trust and other security interests on the Premises.

What does this mean? and is this beneficial to have? and if so why?

Thank you ahead of time

[Ryan Lesley]

Hey Christopher, 

I'm sure others can shed more detail on the subject, but my understanding is that as far as its purpose: it's disclosing that the lease will rank last to be reconciled, in realation to other liens/ property rights, should there be dispute or collection proceedings. 

If you're asking about a lease agreement template that you're using, and if it's beneficial to keep, that I'm not completely sure on. 

I do know that in some cases subordination is required, like a second mortgage lender requiring that the first mortgage loan become subordinate to the new mortgage, as a prerequisite to approval of the new loan. 

But as far as its requirement or benefit to being in a lease agreement, I too am curious of the answer.