(a) Any subordination clause and any subordination agreement which is executed after the effective date of this act and which does not substantially comply with the provisions of Section 2953.2 or Section 2953.3 shall be voidable upon the election of the person whose security interest is to be subordinated or his successor-in-interest exercised within two years of the date on which the instrument to which his security interest is subordinated is executed; provided that such power of avoidance shall not be exercisable by any person having actual knowledge of the existence and terms of the subordination clause or agreement.
(b) The person whose security interest was to be subordinated or his successor-in-interest shall exercise his election to void the subordination clause or subordination agreement provided by subdivision (a) of this section by recording a notice stating that the provisions of Civil Code Section 2953.2 or Civil Code Section 2953.3 have not been complied with, and that he is the holder of the security instrument which is or was to become subordinated and that he elects to avoid the effect of the subordination clause or subordination agreement.
(c) The provisions of this section may be waived by the subsequent execution and recordation by the holder of the security interest which is or may become subordinated, of a statement that he knows of the existence of the subordination clause or agreement and of its terms and that he waives the provisions of this section and the requirements of Sections 2953.1, 2953.2, and 2953.3.
(Added by Stats. 1963, Ch. 1861.)
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