When two lenders share one borrower.

What an intercreditor agreement governs

An intercreditor agreement governs the relationship between two lenders exposed to the same borrower or project. It answers three questions the loan documents deliberately do not: who has priority, who gets paid when and in what order, and who is allowed to act when the credit deteriorates.

The terms feel abstract while the deal performs and become the entire deal when it does not. That asymmetry is why intercreditor negotiation attracts disproportionate legal time relative to its length: nothing in the document matters until everything in it matters.

The two patterns

Almost every intercreditor arrangement in real estate lending is a variation on two structures, and confusing them causes real errors:

The terms that decide the outcome

Five clusters carry the weight, and they are the ones to read before anything else:

• Payment blockage

  When the senior can stop payments to the junior, for how long, and on what triggers. Blockage periods and their reset mechanics are heavily negotiated because they determine whether a junior lender can be starved.
• Standstill

  How long the junior must wait before exercising remedies. The single most consequential number in the document.
• Cure rights

  Whether the junior can cure the senior's defaults to protect its position, how many times, and within what window. Without cure rights a junior can be wiped out by a default it could have fixed.
• Purchase option

  The junior's right to buy out the senior at par on a trigger. The junior's ultimate defense, and only as good as its liquidity when it is needed.
• Control and consent

  Who directs enforcement, who can amend what, and which modifications need the other's consent. Amendment rights are where quiet erosion happens.

Where the negotiation actually goes

The predictable fight is over time. The senior wants a long standstill and broad blockage so it can work out the credit without interference; the junior wants a short standstill, tight blockage triggers, generous cure rights, and a clean purchase option so it is not a spectator to the destruction of its own position.

The second fight is over information, and it is the one that gets under-negotiated. A junior lender with strong remedies and weak information rights cannot use its remedies, because it learns about the problem after the standstill clock has already been running. Information covenants, notice of default, financial delivery, and notice of any modification discussion, are what make the rest of the document operable.

The third, on mezzanine deals, is the mechanics of enforcement itself: what happens to the property-level loan when the mezzanine lender forecloses on the equity, and what the senior requires of any transferee. Read those provisions as an operational plan, not as boilerplate.

The operational half nobody staffs for

Once signed, an intercreditor agreement is a standing obligation to exchange information for the life of the loan, and it decays exactly like a participation's reporting decays. Notices go to people who left. Financial deliveries lapse in year two. The default notice that starts a standstill clock arrives by email to an address nobody monitors.

That is a records problem with legal consequences. The lenders that handle it well treat the relationship as infrastructure: one place where notices, financials, and modification history land against dated lines, scoped so each lender sees what it is entitled to, with the delivery record itself on the log. When the credit turns and the standstill clock matters to the day, the question of when notice was given should have an exportable answer, not a search of someone's inbox.

The same discipline applies to participations, where the lead's information covenants create the identical decay risk. If you run either structure, the participation guide covers the parallel mechanics.