Tenants may look for a way out of their leases and see foreclosure or bankruptcy as their chance to get out of their leases. A trouble-free agreement usually prevents these tenants from leaving the company. Tenants who want to leave a dilapidated building must plan ahead and renegotiate the rental terms or with their landlord, or declare an owner insolvent and terminate their leases before it becomes so bad that the property is involved in foreclosure or bankruptcy. If you are a landlord, you must be able to offer an SNDA from your lender to attract tenants, and you must be able to offer lenders an SNDA of each of your tenants to refinance the property. If the SNDA is to be exercised, the owner will probably be out of the picture. For this reason, many landlords are satisfied with everything that makes SNDA their tenant and lender happy. Tenants need to make sure that the language without problems is mutual. The lender can evict a tenant who does not pay rent. Similarly, tenants should not be required to stay in the property if the landlord or lender has violated the lease. The meaning of the term in an SNDA is similar. The tenant agrees to recognize the mortgage lender as the new owner if the property experiences a foreclosure. Often, the attornment clauses go further and require tenants to accept any new owner of the property as the owner.
Nevertheless, tenants should know what the SNDA means and how it affects their leases. A good place to start is to explain the purpose of each of the legal terms on behalf of the SNDA – subordination, non-interference and attornation. 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 a commercial property, an ownership clause in a Subordination, Non-Disruption and Attornment Agreement (SNDA) requires the tenant to recognize a new owner as the owner and continue to pay the rent, regardless of whether the property changes hands through a normal sale or seizure. Attornment is most often associated with real estate rights and aims to recognize the relationship between the parties to a transaction. .