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Senior Mezz Intercreditor Gap Calculator

Intercreditor agreements define mezz recovery when senior pursues foreclosure.

Property value

Senior debt

Mezz debt

Foreclosure cost

Months to completion

Mezz recovery gap

Mezz recovery

$8,000,000

Senior net recovery

$27,516,667

How the math works

Senior takes debt + default interest first. Mezz gets residual. Gap = mezz claim − recovery.

$40M − $1.2M = $38.8M. $26M + $1.5M senior int = $27.5M. $38.8M − $27.5M = $11.3M for mezz. $8M < $11.3M = full recovery.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Senior Mezz Intercreditor Gap Calculator is built to give a quick, browser-based estimate for senior mezz intercreditor gap. Intercreditor agreements define mezz recovery when senior pursues foreclosure. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

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Practical checks

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How to interpret the senior mezz intercreditor gap result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

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Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

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This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this senior mezz intercreditor gap estimate

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How to Use

Enter property value.
Enter senior debt balance.
Enter mezz debt balance.
Enter senior foreclosure cost.
Enter time to completion months.
Read mezz recovery.

Frequently Asked Questions

What is a senior-mezz structure?

Two-tier financing: senior loan secured by real property (mortgage), mezz loan secured by equity interest in property-owning entity (pledge of ownership). Typical stack: 60-70% LTV senior + 10-20% LTC mezz. Senior has priority lien on property; mezz has priority pledge on equity. Intercreditor agreement governs relationship. Critical document — poorly drafted intercreditors cause years of litigation in distress scenarios.

What happens in distress?

Senior forecloses on property: mezz equity pledge becomes worthless. Mezz forecloses on equity pledge: mezz becomes new property owner, subject to senior mortgage. Mezz typically prefers second option (protect investment via property takeover) but requires sufficient capital to service senior. Intercreditor specifies: standstill periods, cure rights for each tier, step-in rights (mezz takes over if senior default). Experienced debt fund mezz lenders always secure cure rights.

What's the recovery gap?

Typical recovery distribution in senior foreclosure: (1) Senior debt + default interest + legal = first priority. (2) Mezz: receives only residual after senior fully paid. If property value has declined below senior + legal costs, mezz recovery = zero. Gap analysis: property value − senior recovery = mezz available pool. Mezz claim − available = recovery gap. Often 40-80% of mezz principal lost in property distress.

How to mitigate mezz risk?

(1) Lower mezz LTV (under 80% total LTV, leaving 20%+ equity cushion). (2) Strong cure rights in intercreditor. (3) Step-in rights with pre-agreed senior cooperation. (4) Personal guarantees from sponsor. (5) Cross-collateralization with sponsor's other assets. (6) Springing recourse on misuse of property. Sophisticated mezz lenders layer 3-5 of these; less sophisticated lenders accept weaker intercreditor and lose in distress.