When entering into a commercial lease agreement, one important document that both the landlord and tenant should consider is the subordination, non-disturbance, and attornment agreement (SNDA).
An SNDA is a legal document that outlines the rights of the landlord, tenant, and any potential lenders in the event of a default. It is typically signed by the landlord, tenant, and any lenders providing financing for the property.
The subordination clause in an SNDA outlines the priority of the tenant`s lease in relation to any mortgages or liens held against the property by the landlord`s lender. This means that if the landlord defaults on their mortgage or loan, the tenant`s lease will be subordinate to the lender`s lien, and the tenant may be evicted if the lender forecloses on the property.
The non-disturbance clause in an SNDA ensures that if the landlord defaults on their loan and the lender takes possession of the property, the tenant`s lease will not be terminated. The lender is required to honor the terms of the lease as long as the tenant continues to pay rent and comply with the lease agreement.
Lastly, the attornment clause in an SNDA requires the tenant to recognize any new owner of the property as their landlord in the event of a foreclosure or sale. This means that the tenant must continue to pay rent and comply with the terms of the lease, even if the ownership of the property changes.
Having an SNDA in place can provide peace of mind for both the landlord and tenant. The tenant is guaranteed the right to occupy the premises and the landlord is protected in the event of a default on their loan.
If you`re entering into a commercial lease agreement, it`s essential to have an experienced attorney review and draft an SNDA to ensure your rights and interests are protected. You can also find downloadable PDF versions of these agreements online to get started.