Definition
Non-disturbance is a provision in a lease or SNDA Agreement in which a lender agrees that a tenant’s lease will remain in effect if the lender forecloses on the property—provided the tenant is not in default.
Why Non-Disturbance Matters
- Protects tenants from eviction after foreclosure.
- Preserves rental income for lenders.
- Stabilizes property value during distress.
- Enhances marketability of commercial leases.
How It Works
- Landlord obtains financing secured by the property.
- Tenant signs an SNDA with lender.
- If foreclosure occurs, lender becomes new landlord.
- Tenant continues occupancy under existing lease terms.
Conditions for Protection
- Tenant must not be in lease default.
- Lease must comply with mortgage requirements.
- Tenant must honor attornment provisions.
Non-Disturbance vs Subordination
- Subordination: Lease is junior to mortgage.
- Non-Disturbance: Lease survives foreclosure.
These two concepts are typically paired within an SNDA agreement.
Investor Perspective
- Provides income continuity during foreclosure.
- Maintains occupancy rates.
- Supports property valuation stability.
Tenant Perspective
- Reduces risk of business disruption.
- Ensures long-term occupancy security.
- Provides contractual certainty.
Common Pitfalls
- Failing to execute SNDA with major tenants.
- Ambiguous language limiting tenant protections.
- Conflict between lease and mortgage documents.
- Overlooking lender approval requirements.
Investor Checklist
- Confirm executed SNDAs for anchor tenants.
- Review lease compliance with mortgage terms.
- Ensure non-disturbance protections are enforceable.
- Assess tenant credit quality.