If you`re a lender, you have just as many reasons to want an SNDA. Depending on when the lease was signed and what the lease says, the mortgage may not give you a first full pledge on the property. Although the lease provides that the tenant`s rights are subordinated to all current and future mortgages, this subordination often depends on the tenant being provided with an SNDA acceptable to the lender. And if the lender eventually takes over the property, many NDSs provide that the lender is not responsible for certain past or future obligations of the owner. The “attornment” part of the agreement, which is perhaps the most confusing part of an SNDA, simply means that the tenant agrees to recognize the buyer as the new lessor under the lease upon the forced sale. This is only a way to formalize the legal relationship between an owner and the new owner of the property. Attornment occurs when a tenant recognizes a new owner of the property as the new owner. In the event of a change of ownership of the commercial real estate, an attornation clause in an SNDA agreement (subordination, non-disturbance and attornment) requires the tenant to recognize a new owner as the owner and continue to pay the rent, that the property changes ownership through a normal sale or seizure. What is an SNDA? Tenants tired of reading complex and lengthy leases may be tempted to skip a paragraph at the end of the document beginning with the words “subordination, non-disturbance and twisting” (SNDA). However, the language of the SNDA has taken on a new meaning in this economic context where it is no longer shocking to learn that a commercial lessor has deviated from the mortgage on his large office building. Attornment is most often associated with real estate rights and aims to recognize the relationship between the parties in a transaction.
For example, there may be separation when a tenant rents an apartment for the sole purpose of changing the landlord during the lease. The attornment agreement does not create new rights for the landlord unless the tenant signs it. The landlord can use a tenant`s refusal to sign as a reason for evacuation. SNDA stands for subordination, non-discrimination and attoration agreement. You need an SNDA if you are a commercial tenant, commercial landlord or lender who borrows for commercial real estate. . . .