4 California Real Estate Law & Practice § 114.04

Summary

• [1] Executory Agreement

  The law and real estate business practices recognize three principal types of subordination agreements.

  The first, an executory subordination agreement, is an agreement under which the subordinating party (usually a seller of land) agrees to execute a subsequent instrument subordinating his or her security interest to another security interest (usually the lien of a development or construction loan).1 Since an executory agreement will not result in subordination unless and until another instrument is executed, if the seller refuses to execute the other instrument the buyer may seek damages for breach of the agreement or specific performance of its terms.2