Intercreditor Agreements in Florida Real Estate
An intercreditor agreement governs the relationship between multiple creditors who hold security interests in the same borrower’s assets. In Florida real estate, these agreements are essential when a property has layered financing (senior mortgage, junior mortgage, mezzanine debt).
Key Provisions
- Payment waterfall: Order of payment from borrower proceeds (senior first)
- Standstill period: Junior lender agrees not to act for a defined period after senior default
- Cure rights: Junior lender can cure senior defaults to protect its position
- Buyout rights: Junior lender option to purchase the senior loan at par
- Notice requirements: Mutual notice of defaults and enforcement actions
- Proceeds allocation: Division of asset sale, insurance, and condemnation proceeds
- Amendment restrictions: Modifications requiring consent or notice
Why It Matters
- Florida mortgage priority based on recording date; agreements can alter priority
- Prevents costly inter-lender litigation
- Protects senior lender from junior lender interference
- Grants junior lender protective cure and buyout rights
- Provides borrower with clarity on decision-making authority
Related Terms
- Mortgage — Senior debt instrument
- Subordination Agreement — Priority modification
- Foreclosure — Default enforcement
Barnes Walker Real Estate Finance
Barnes Walker’s attorneys draft and negotiate intercreditor agreements for multi-layered real estate financing in Southwest Florida. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC