An intercreditor agreement is the contract among lenders holding different positions against the same borrower or property — senior mortgage and mezzanine, or the holders of a split loan's A-note and B-note — establishing their relative rights. Its core provisions set payment and lien priority, standstill periods restricting junior enforcement, the junior lender's right to cure senior defaults, its option to purchase the senior loan (typically at par plus accrued interest), and consent rights over modifications and workout actions.
In a stressed capital stack, the intercreditor agreement — not the loan documents alone — determines who can act and when: whether the mezzanine lender may foreclose on the equity, whether the senior may modify without consent, and who can buy whom out. Any purchase of a senior or junior position begins with reading it; see how buyers price a CRE loan.
Why credits like this reach a workout desk: bank noncurrent commercial real-estate loans have risen while reserve coverage slips at community banks (FDIC Quarterly Banking Profile), and roughly $957 billion of commercial and multifamily mortgage debt was scheduled to mature in 2025 — against a total market of about $4.8–5.0 trillion, ~38% of it held by banks and thrifts (Mortgage Bankers Association). See the CRE distress statistics hub for the full figures and sources.
Primary sources: FDIC Quarterly Banking Profile, Mortgage Bankers Association, and interagency (FDIC / OCC / Federal Reserve) guidance on CRE loan accommodations and workouts. Figures are directional and updated periodically; confirm the latest release before relying on a specific number.
Notice of senior defaults, the right to cure them within defined periods, an option to purchase the senior loan at par plus accrued amounts, and limits on senior modifications that would increase principal or interest ahead of the junior position.
A negotiated period during which the junior lender may not exercise remedies — or may exercise only specified ones, such as a UCC sale meeting stated conditions — so that the senior lender's enforcement takes precedence.
It travels with the position and can enlarge or confine every remedy the buyer is paying for; Standing Bid Capital reviews intercreditor terms as the first step in underwriting structured positions — Request a confidential review.