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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Deed of priority

What is a deed of priority, and what does the priority amount do?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A deed of priority is an agreement between two or more creditors secured over the same assets, often signed by the borrower too, that fixes the order in which they rank. It often caps how much the first-ranking creditor recovers ahead of the others, a figure called the priority amount, and debt above that cap usually ranks behind the second creditor. It is common where a bank and a finance company both hold general security over one business, or where two mortgages sit on one property. The cap matters because the first creditor's lending can grow after the deed is signed.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// WHAT IT IS NOT

An intercreditor agreement governs everything between lenders, including who may enforce and when; a deed of priority is usually narrower, settling the ranking and the priority amount over shared security.

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SECURITY AND RANKING

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