When a mortgage precedes an easement on a property, a foreclosure of that mortgage can wipe out the easement, clearing the property of any requirements for conservation (in the case of a conservation easement) or public access (in the case of a trail easement). This does happen! To guard against this, the mortgage holder needs to sign a non-disturbance agreement, which allows the easement to survive a foreclosure.
Of additional concern, if a tax deduction will be sought for an easement donation, tax law necessitates the mortgage holder “subordinating” the mortgage to the easement.
The bank or mortgage servicing company has no obligation to agree to non-disturbance or subordination. Such actions are done voluntarily. As such, it behooves would-be easement holders and landowners to ask the mortgage holder only for what is needed and nothing more.
The Model Consent, Non-Disturbance, and Subordination Agreement provides a path to accomplish this in conjunction with guidance from legal counsel. The model is easily customized to simply guard against foreclosure or to provide both this safeguard and subordination as required for a tax deduction.
The prior edition (2011) of this model (entitled “Mortgage Subordination”) was designed specifically for projects involving tax deductions. This new edition was reworked so that if no tax deduction is involved, users can easily tailor it to be less demanding on the mortgage holder while still safeguarding against foreclosure.
