Escrow & Title
What is a 'subordination clause' in a Nevada commercial lease?
AA clause the tenant uses to reduce their rent
BA clause making the tenant's leasehold interest subordinate to any present or future mortgage on the property — protecting lenders who may take over the property through foreclosure✓ Correct
CA clause subordinating the landlord's rights to the tenant's
DA clause reducing the lease term in specific circumstances
Explanation
A subordination clause in a commercial lease provides that the tenant's leasehold interest is subordinate to the landlord's existing or future mortgage. Combined with a non-disturbance agreement, this protects the lender's rights while also protecting the tenant's continued occupancy rights.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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