An SNDA (subordination, non-disturbance, and attornment agreement) is a three-party agreement among tenant, landlord, and lender. The tenant subordinates its lease to the mortgage; the lender agrees not to disturb a tenant in good standing after foreclosure; and the tenant agrees to recognize the lender or a purchaser as its new landlord.
When a landlord finances or refinances a building, the lender wants to know two things about each lease: that the mortgage has priority over it, and that the good leases will survive a foreclosure. The SNDA delivers both, and gives the tenant the protection it needs in return. Cornell's Legal Information Institute covers subordination; practitioner guides such as FLB Law's note on estoppels and SNDAs cover the tenant's perspective.
The three parts
| Part | Who gives it | What it does |
|---|---|---|
| Subordination | Tenant | The lease ranks behind the mortgage |
| Non-disturbance | Lender | A tenant not in default keeps its lease after foreclosure |
| Attornment | Tenant | The tenant recognizes the lender or a purchaser as landlord |
Tenants negotiate what the lender will and will not assume: unfunded improvement allowances, prepaid rent, offsets for landlord defaults, and options. Lenders usually decline liability for the prior landlord's acts, which is why tenants with large allowances or free rent push for exceptions.
Why it is a lease administration event
SNDA requests arrive in batches, at financing, with the estoppel certificates, on a deadline the lease sets. The property team has to know which leases require the tenant to sign an SNDA, which tenants already have one from a prior lender, and which leases carry negotiated exceptions the new lender will need to see. The executed SNDA then belongs in the lease file and in the lease abstract, because it changes who the tenant deals with if the building changes hands through foreclosure.
The practical note
Many leases make the tenant's obligation to sign an SNDA conditional on receiving a non-disturbance covenant in a commercially reasonable form. The reverse is also true: a tenant that wants non-disturbance should ask for the SNDA at lease signing, when the existing lender is known, rather than waiting for the next financing.
Related terms
Frequently asked questions
Why does a lender want an SNDA?
Subordination puts the mortgage ahead of the lease, so the lender can foreclose free of leases it does not want to keep. Non-disturbance keeps the leases it does want to keep alive, and attornment binds those tenants to recognize the lender or buyer as landlord. Both protect the collateral value of the building.
Why does a tenant want an SNDA?
Non-disturbance. Without it, a lender foreclosing on a mortgage recorded before the lease could terminate the lease and evict the tenant, or renegotiate rent. The non-disturbance covenant protects the tenant's investment in its premises as long as it is not in default.
How does an SNDA relate to an estoppel certificate?
They are often requested together, at financing or sale. The estoppel confirms the facts of the lease; the SNDA sets the legal relationship with the lender. Both are usually required of the tenant by the lease within a stated period after request, and both depend on the lease record being accurate.
Who signs an SNDA?
The tenant, the landlord, and the lender, each with authority to bind their organization. The agreement is typically recorded against the property so that a purchaser at foreclosure takes subject to it.