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HomeCommercial CodeDiv. 1Ch. 3§ 1310 Subordination Of Obligations

§ 1310 Subordination Of Obligations

Commercial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 1310 Subordination Of Obligations

Key Takeaways

  • •You can make one promise less important than another promise you have to keep.
  • •If you owe money to two people, you can agree with one of them to wait until the other person is paid first.
  • •This doesn't mean the waiting person gets any special rights over your stuff.

Example

You owe money to your friend for a bike and also owe money to the bank for a car. You tell your friend they have to wait to get paid until the bank gets their money first.

Your friend agrees to wait, but this doesn't give them any special rights to your stuff if you can't pay.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 1310 Subordination Of Obligations

An obligation may be issued as subordinated to performance of another obligation of the person obligated, or a creditor may subordinate its right to performance of an obligation by agreement with either the person obligated or another creditor of the person obligated. Subordination does not create a security interest as against either the common debtor or a subordinated creditor. (Added by renumbering Section 1209 by Stats. 2006, Ch. 254, Sec. 28. Effective January 1, 2007.)

Last verified: January 23, 2026

Key Terms

obligationsubordinatedsecurity interestcommon debtorsubordinated creditor

Related Statutes

  • § 10307 Lessee Creditor Rights
  • § 1304 Good Faith Contract Obligation
  • § 17302 Continued Perfection Transition
  • § 17303 Unperfected Security Interests
  • § 17304 Transitional Security Interest Perfection

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Commercial Code. Section 1310.
View Official Source