Subordination Clause: What It Means in Mortgages and Real Estate Finance
Warren Team
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Key terms
- MortgageA loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments over a set term (typically 15-30 years) until the loan is paid off.
- REIT (Real Estate Investment Trust)A company that owns, operates, or finances income-producing real estate. Allows investors to earn real estate income without buying property directly. Must pay 90% of income as dividends.
- Real Estate SyndicationA partnership structure where multiple investors pool capital to purchase larger properties than they could afford individually. A sponsor or general partner manages the investment while limited partners provide capital and receive passive income distributions.
- Estate PlanningThe process of arranging how your assets will be distributed after death and making healthcare decisions if you become incapacitated. Includes wills, trusts, and powers of attorney.
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