A BILL TO BE ENTITLED
AN ACT TO clarify the requirements for subordination agreements.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 1 of Chapter 39 of the General Statutes is amended by adding a new section to read:
"§ 39-6.6.  Subordination agreements.
(a)	A written commitment or agreement to subordinate or that subordinates an interest in real property signed by a person entitled to priority shall be given effect in accordance with its terms and is not required to state any interest rate, principal amount secured, or other financial terms. For purposes of this section, an "interest in real property" shall include all rights, title, and interest in and to land, buildings, and other improvements of an owner, tenant, subtenant, secured lender, materialman, judgment creditor, lienholder, or other person, whether the interest in real property is evidenced by a deed, easement, lease, sublease, deed of trust, mortgage, assignment of leases and rents, judgment, claim of lien, or any other record, instrument, document, or entry of court.
(b)	The trustee of a deed of trust shall not be a necessary party to a subordination agreement unless the deed of trust provides otherwise.
(c)	For purposes of G.S. 1-47, a commitment or agreement described in subsection (a) of this section is deemed a conveyance of an interest in real property.
(d)	The section is not exclusive. No agreement that is otherwise valid shall be invalidated by failure to comply with the provisions of this section."
SECTION 2.  This act becomes effective October 1, 2003, and applies to subordination agreements filed or recorded on or after that date.