Glossary / Lease terms and deal stages
Also known as: Subordination, non-disturbance and attornment agreement
A three-part agreement among a tenant, a landlord's lender, and often the landlord: the tenant subordinates its lease to the loan, the lender agrees not to disturb the tenant after a foreclosure, and the tenant agrees to recognize a new owner.
SNDA stands for subordination, non-disturbance, and attornment. Holland & Hart describes it as the document that governs the relationship between a lender and a tenant through their common connection to the landlord. With subordination, the tenant agrees the lender's mortgage takes priority over the lease. With non-disturbance, the lender agrees the tenant can stay after a foreclosure if it keeps performing. With attornment, the tenant agrees to treat the new owner as its landlord.
According to AllLaw, without a non-disturbance clause a foreclosure can terminate the lease even if the tenant is not in default. Whitman Legal Solutions notes that lenders commonly require SNDAs on refinancing, second mortgages, and ownership changes. This is general information, not legal advice. Rules vary by state and by contract, so have the actual lease language reviewed.
When a tenant makes an SNDA a condition of signing, the landlord's lender becomes part of the closing, and the lender's review is outside your control. If your commission is payable at Lease execution or later milestones, waiting on lender paperwork can move those dates. Holland & Hart also notes that SNDAs may require lender consent for lease modifications, which can matter for later amendments and expansions.
The non-disturbance piece protects the rent stream your commission was based on. If a lease is terminated in foreclosure, what happens to any unpaid commission installments depends on your commission agreement, not the SNDA.
If your tenant will require an SNDA, raise it at the LOI stage so the lender's timeline is built into the deal schedule.
