1. Agreement signed by a co-maker placing an interest in property owned jointly with a borrower behind the lender's security interest in pledged collateral. Lenders in states recognizing the Tenants in Common form of property ownership ordinarily require co-makers to sign a promissory note or a subordination agreement if the borrower defaults.
2. instrument acknowledging that a creditor's claim is secondary to claims of other creditors. Thus, under a subordination agreement, a loan by an officer of a corporation to the firm has a secondary claim to assets after a bank loan. The agreement assures that a bank loan will be paid off first.
