Lease Subordination Agreement - Nebraska 2025

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The lease will include a provision that requires the tenant to subordinate its lease to all existing and future loans. This gives the lender the option, after a foreclosure, to either recognize the lease or terminate it.
What is Subordination? Subordination is putting something in a lower position or rank. Therefore, a subordination agreement puts the lease below the mortgage loan in priority. Mortgage lenders want the leases to be subordinate to the mortgage. That way, the mortgage loan is paid first if there is a foreclosure.
A subordination agreement must be signed and acknowledged by a notary and recorded in the official records of the county to be enforceable.
Unless your lease has an SNDA, your lease will be canceled if the property is foreclosed upon. This leaves tenants in a dangerous and time-sensitive position where they have to find a new property in rental time, often without the security deposit paid to the original landlord.
Example of a Subordination Agreement A standard subordination agreement covers property owners that take a second mortgage against a property. One loan becomes the subordinated debt, and the other becomes (or remains) the senior debt. Senior debt has higher claim priority than junior debt.
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The Subordination of Lease clause establishes that the tenants lease is subordinate to the liens of any current or future mortgages on the property, giving the mortgage lenders rights priority over the tenants rights.

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