When a common borrower of two or more lenders fails to comply with the loan payments, the mortgaged properties are then forwarded for sale to cover the pending balances of the loan. The contract agreement that is created due to this circumstance is called an inter-creditor agreement.
An inter-creditor agreement contains the necessary information on how these properties are divided among the lenders. A structure is followed making some lenders get the proceeds first over others. Aside from that, stipulations like a non-compete agreement are stated to avoid overlapping of interests. The following inter-creditor agreement templates provided in Word and in PDF format show how this type of agreement is procured.
An inter-creditor agreement is a contract generated from creditor parties agreeing to the regulations to be implemented regarding their interests to a common borrower.
This basic agreement template, as provided on this website, is used by lenders to establish their rights on the lien of a specific financing which differs greatly from referral agreement templates applying only for referrals and not on financing contracts.
Both agreement templates in PDF format on this website are procured when the debtor fails to pay off his loan. The lien on the debtor’s properties are then used to the advantage of the lenders which leads us to these agreements. Here are the differences between a subordination agreement and an inter-creditor agreement:
The following are the key elements of an inter-creditor agreement as depicted on the various inter-creditor agreement templates provided on this website:
An inter-creditor agreement requires the meeting of the minds of these lenders particularly for the rankings to be followed once the agreement is finalized.