Contracts
A 'subordination clause' in a lease agreement means:
AThe tenant agrees to notify the landlord before subleasing
BThe tenant's leasehold interest is subordinate to any existing or future mortgage on the property✓ Correct
CThe landlord agrees to subordinate their rights to the tenant's
DThe lease is subordinate to local zoning ordinances
Explanation
A subordination clause in a lease provides that the tenant's leasehold interest is subordinate to the landlord's mortgage lender. This means if the property is foreclosed, the lender's interest is superior to the tenant's lease. It is often paired with a non-disturbance clause protecting the tenant if the property is foreclosed.
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