Document background
The Landlord Lien Subordination Agreement is essential in Canadian commercial leasing and financing transactions where a tenant seeks to obtain secured financing while occupying leased premises. Under Canadian law, landlords typically have statutory and contractual rights (including the right of distress) over a tenant's personal property located at the leased premises. However, when tenants require financing, lenders often require first-priority security interests in the tenant's assets as collateral. This document formalizes the arrangement whereby the landlord agrees to subordinate their rights to the lender's security interest, enabling the tenant to obtain necessary financing while protecting the lender's security position. The agreement typically includes detailed provisions regarding notice requirements, access rights, and the parties' respective rights in default scenarios, all within the framework of applicable provincial personal property security legislation and commercial tenancy laws.
