5+ Intercreditor Agreement Templates – Word, PDF
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.
Agreement Template Bundle
Subordination and Intercreditor Agreement
treasurer.ca.govIntercreditor Loan Agreement
ibervilleparish.comBank Intercreditor Agreement
contracts.patreasury.govAbout Inter-Creditor Agreement
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.
Subordination Agreement vs. Inter-creditor Agreement
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:
- In a subordination agreement, parties are paid from the sale of the mortgaged properties by ranking. Thus, the lender who agrees to a subordinate lien rank will receive the proceeds at a later date.
- On the other hand, an inter-creditor agreement provides for a leeway to the subordinate lien by being offered with the right to purchase at face value of the claim of the first holder of the lien instead of the fair market value to secure payment.
Sample Intercreditor Agreement
insolvencies.deloitte.caSenior Lender Intercreditor
chicagoreporter.comIntercreditor Agreement for Mortgage
michigan.govKey Elements of 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:
- Structural Assumptions – Assumptions are prepared in accordance with the nature of the loan agreements of a similar borrower between the first lender and the successive ones.
- Agreement Parties – Based on these assumptions, a structure is then created as to the ranking of debt in some way relevant to who the involved parties are in the agreement.
- Amendments and Waivers – This include specifications of the right to amend and to waiver certain agreement stipulations and provisions for both the senior and junior lenders.
- Allocation of Proceeds – As one can see in certain inter-creditor templates, the allocation of the proceeds from selling property are distributed to the lenders as payment of the loan following the ranking set on this agreement.
- Purchase Option of Senior Loan – This applies to junior lenders where they are given an alternative to buy the claims of the senior lender at par value.
- Restrictions on agreement – Similar restrictions to a human resources confidentiality agreement may include the enforcement action and confidentiality of the terms in the agreement.
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.
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