SNDA

SNDA stands for Subordination, Non-Disturbance, and Attornment. It is a tri-party agreement among a commercial tenant, the landlord, and the property's mortgage lender. The SNDA governs the interaction between a lease and the property's financing, aiming to balance the lender’s security interest with the tenant’s occupancy rights in the event of foreclosure or other changes in property ownership.

The agreement centers on three concepts. Subordination means the tenant’s lease is subordinate to the lender’s mortgage, giving the lender priority over the lease in matters related to the property’s lien. Non-disturbance obligates the lender to honor the tenant’s lease and allow continued occupancy if the landlord defaults and the lender forecloses, so long as the tenant remains in good standing under the lease. Attornment requires the tenant to recognize the new owner or landlord resulting from foreclosure or transfer as the landlord under the existing lease terms.

SNDA forms are typically attached to or incorporated into the lease and related loan documents. They are commonly used in financed commercial properties to protect the lender’s collateral while providing continuity for tenants. Negotiation considerations for tenants often focus on the non-disturbance protection, the duration and scope of the attornment, and any consequences if the property changes hands or the loan is reassigned. Landlords may seek favorable subordination terms or a robust non-disturbance clause to facilitate financing.

In practice, an SNDA helps reduce risk for lenders by securing their security interest and helps tenants avoid abrupt disruption of occupancy due to foreclosure. Tenants should review SNDA provisions carefully, ideally with legal counsel, to ensure clarity on occupancy rights, remedies, and any potential default scenarios.