A Priority Agreement is a notation on a Land Title where one chargeholder has chosen to grant priority over its prior registered charge to a subsequent chargeholder.
In most cases, a Priority Agreement is registered by a lender (bank) holding a mortgage which requires priority over a previously registered mortgage. One of the most common situations where this occurs is where a developer has used a secondary lender to finance the early stages of development and, once the development has proceeded to the building stage, an institutional lender (major bank) has lent additional funds to finish the project. In most cases, the institutional lender will require, as a condition of lending a Priority Agreement over the first lender.
From a Buyers perspective, most Priority Agreements on a Land Title are of little consequence on the purchase of residential real estate as the standard contract of purchase and sale require that all financial charges be discharged. As the Priority Agreement are linked to the charges (in this example the Mortgage) they reference, the Priority Agreement is discharged along with the Mortgage.