Transaction Mechanics
SNDA
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Also called: subordination non-disturbance and attornment · subordination, non-disturbance and attornment agreement
An SNDA does three things at once: subordination confirms the tenant's lease is junior to the landlord's mortgage (so a foreclosure doesn't automatically wipe out the lender's priority), non-disturbance obligates the lender not to terminate the tenant's lease if it forecloses, provided the tenant isn't in default, and attornment requires the tenant to recognize the foreclosing lender (or a subsequent buyer) as its new landlord under the same lease terms.
Lenders require SNDAs from material tenants as a condition of financing so a foreclosure doesn't trigger cascading lease terminations that would tank the collateral's value; tenants negotiate for the non-disturbance protection so their occupancy right survives a landlord's default regardless of the subordination.
A tenant signing a lease without a negotiated SNDA right is exposed to losing its space entirely if the landlord's lender forecloses — this is a standard negotiation point for any tenant making a significant leasehold investment (buildout, equipment) that depends on long-term occupancy security.
Related
Terms that travel with this one
- Estoppel CertificateA signed statement from a tenant confirming the current terms of its lease — rent, term, deposit, defaults, and any side agreements — used by a buyer or lender to verify the seller's lease representations.
- NNN (Triple Net)A lease where the tenant pays base rent plus its pro-rata share of the three major operating costs — property taxes, insurance, and common area maintenance — leaving the landlord with reduced expense exposure.
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