Advisory Opinion
In 2018, a mortgage was taken out for $1,750,000. However, this mortgage was actually a subordinate mortgage to another mortgage that already existed, which was worth $3,475,057.65.
A subordinate mortgage is a type of mortgage that is secondary to another mortgage. In other words, it is a loan that is taken out on a property that already has a primary mortgage in place. This means that the primary mortgage takes priority over the subordinate mortgage in terms of repayment. If the property were to be sold, the primary mortgage would be paid off first, and any remaining funds would then go towards paying off the subordinate mortgage.
The 2018 mortgage specifically states that it is intended to be a subordinate mortgage lien to that mortgage. A lien is a legal claim or right against a property. When a mortgage is taken out, a lien is placed on the property to secure the loan. This means that if the borrower defaults on the loan, the lender has the right to foreclose on the property to recoup their losses. In the case of a subordinate mortgage, the lien is secondary to the lien of the primary mortgage.
The fact that the 2018 mortgage was intended to be a subordinate mortgage lien to the pre-existing mortgage means that the borrower was aware of the primary mortgage and agreed to take out a secondary mortgage on the property.
It is important to note that when a property is sold, the proceeds from the sale are used to pay off any outstanding mortgages or liens on the property. If there are multiple mortgages or liens on the property, they are paid off in order of priority. This means that the primary mortgage is paid off first, and any remaining funds are then used to pay off the subordinate mortgage. If there is not enough money from the sale to pay off all of the outstanding mortgages or liens, the lender or lienholder may have the right to pursue other legal action to recoup their losses.
In this case, the mortgage is intended to be subordinate to a mortgage consolidation, modification, and security agreement between the mortgagor (the borrower) and the holder (the lender). The consolidation and modification agreement is for an aggregate principal amount of $3,475,057.65.
A mortgage consolidation, modification, and security agreement is a legal document that consolidates two or more mortgages into one loan. This can be beneficial for borrowers who want to simplify their mortgage payments or who want to take advantage of lower interest rates. It can also help borrowers who are struggling to make payments on multiple mortgages.
In addition to consolidating mortgages, a mortgage consolidation, modification, and security agreement can also modify the terms of the existing mortgages. This can include changing the interest rate, extending the term of the loan, or changing the payment structure. The security agreement is a legal agreement that gives the lender the right to foreclose on the property if the borrower defaults on the loan.
The subordinate mortgage lien in this case is intended to be subject and subordinate to the mortgage consolidation, modification, and security agreement. This means that the subordinate mortgage takes a lower priority in terms of repayment than the mortgage consolidation, modification, and security agreement.
It is also important to note that the subordinate mortgage lien being discussed is intended to be recorded immediately prior to the mortgage consolidation, modification, and security agreement in the Rensselaer County Clerk’s Office and in the Albany County Clerk’s Office. Recording a mortgage is a legal requirement that gives public notice of the mortgage and establishes the priority of the lien. This means that if there are any other liens on the property, the recording establishes the order in which they must be paid off.
The $1.7 million loan that Judd took out is secondary to the $3 million initial mortgage on the property, and a breach of section 13 of the contract.
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