2025 Session
Last amended: 2004 session
§ 336.1-310 — Subordinated Obligations
Plain-Language Summary
A creditor can agree that its right to payment is subordinate to (ranked below) another creditor's right. This subordination does not create a security interest.
336.1-310 SUBORDINATED OBLIGATIONS.
An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor.
History:
History: History:
2004 c 162 art 1 s 25
Practical Notes
Creditors can agree on who gets paid first without creating a lien. This matters in bankruptcy and collection situations.