This document is a deed of priority.
Priorities
A borrower may borrow money from more than one lender and the lenders agree that the borrower may use the same security to secure the debts of all lenders. The borrower and lenders should then enter into a deed of priority under which they agree which lender will have the priority to enforce the security should the borrow default on a loan.
This precedent does not include boilerplate clauses for a loan agreement but only clauses relating to creating priority between lenders over the same securities.
Marshalling
In simple terms, marshalling may apply to circumstances where one lender has a claim against two or more securities (Lender A) to enforce its debt against the borrower and the other lender (Lender B) only has a claim against the security held by both lenders. Where marshalling applies, Lender B may require Lender A to make a claim first against the security to which Lender B has no claim. See clause 3.
Related precedents
- Basic loan agreement
- Guarantee of payment of loan
- General security deed
- Amendment and restatement agreement
- Forbearance of debt agreement
- Real property mortgage
- Deed of assignment of debt
- Loan agreement checklist
This document has been authored for LexisNexis by Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editors Geoff Geha, Partner, Clayton Utz and Karen Lee, Principal and Consultant, Legal Know-How.