Definition
Attornment is a tenant’s agreement to recognize a new owner or lender as the landlord if the property is sold or foreclosed upon.
It ensures that the lease remains valid and enforceable after a transfer of ownership.
Why Attornment Matters
- Protects lenders in foreclosure situations.
- Provides continuity of rental income.
- Maintains lease stability for tenants.
- Reduces uncertainty during ownership changes.
Common Scenario
- Landlord defaults on mortgage.
- Lender forecloses on property.
- Ownership transfers to lender or new buyer.
- Tenant attorns to the new landlord.
Attornment in SNDA Agreements
Attornment commonly appears in an SNDA Agreement (Subordination, Non-Disturbance, and Attornment).
- Subordination: Lease is subordinate to mortgage.
- Non-Disturbance: Tenant can remain after foreclosure.
- Attornment: Tenant recognizes new landlord.
Attornment vs Assignment of Lease
- Attornment: Tenant acknowledges new landlord.
- Assignment: Lease rights are transferred to another party.
Risk Considerations
- Tenants may negotiate limitations on liability to new landlord.
- Lenders rely on enforceability of lease terms.
- Lease language must clearly define obligations.
Benefits to Investors
- Preserves asset value during foreclosure.
- Maintains occupancy and cash flow.
- Improves financing security.
Common Pitfalls
- Failing to include attornment provisions in lease.
- Ambiguous SNDA terms.
- Conflicts between lease and mortgage documents.
- State-specific enforcement issues.
Investor Checklist
- Confirm lease includes attornment clause.
- Review SNDA agreement carefully.
- Ensure lender rights are protected.
- Verify tenant protections are balanced.