Page 34 Spring 2019 Points of Interest priorities among the A, B and C after the subordination? One result could be that A becomes subordinate to B as well as to C (the absolute priority approach). However, California and most jurisdictions follow thepartialsubordination,approachwhich would leave B in a neutral position and only subordinate A to the extent it will not result in a windfall to B or penalize B by causing it to be junior to a greater amount of debt. B’s lien would not be affected by the agreement between A and C, to which it was not a party. This determination is important, for example, in the event of a sale that produces an amount that is insufficient to pay off all liens. Clearly, the prudent thing to do in this situation, prior to entering into the Subordination Agreement, would be for A and C to obtain a Preliminary Report to determineifthereareinterveningliensand toobtainaTitlePolicyinsuringthepriority aftertherecording. A,theseniorlendercan then choose not to subordinate or require Priority of Liens – continued from page 33 that any intervening liens be satisfied beforeitwillsubordinate. Theseniorlender can also require that the Subordination Agreement contain language that makes its subordination ineffective if there are intervening liens that would have priority over its lien. NormaJ.Williams,Esq.isacommercialreal estate attorney whose practice focuses on finance, purchase and sale and leasing transactions. Sheisafrequentspeakerand author, has drafted major commercial real estate legislation and has held leadership positions in local, state and national real estate bar associations. She received her B.A. degree magna cum laude from Wesleyan University and her J.D. degree from UC Berkeley School of Law. Contact: njwilliams@willassoc.com; (213) 996-8464.