Definition
An SNDA Agreement (Subordination, Non-Disturbance, and Attornment) is a contract among a tenant, landlord, and lender that governs the treatment of a lease if a property is foreclosed upon or ownership changes.
The Three Components
1. Subordination
The tenant agrees that the lease is subordinate to the lender’s mortgage, meaning the lender’s interest takes priority.
2. Non-Disturbance
In exchange for subordination, the lender agrees that if foreclosure occurs, the tenant may continue occupying the property under existing lease terms.
3. Attornment
The tenant agrees to recognize the lender (or new owner) as the new landlord after foreclosure.
Why SNDA Agreements Matter
- Protect tenants from eviction after foreclosure.
- Protect lenders by preserving rental income.
- Clarify legal relationships in distressed scenarios.
- Stabilize property value during financing events.
Typical Use Cases
- Commercial office leases.
- Retail anchor tenant agreements.
- Industrial and logistics facilities.
- CMBS-financed properties.
Without an SNDA
- Lease may be extinguished in foreclosure.
- Tenant occupancy rights may be uncertain.
- Lender may face rental income disruption.
Key Negotiation Points
- Scope of non-disturbance protections.
- Limitations on tenant claims against new landlord.
- Recognition of prepaid rent or security deposits.
- Notice and cure rights for tenants.
Risk Considerations
- Ambiguous language may create litigation risk.
- State law may affect enforceability.
- Lease provisions must align with loan documents.
Investor Checklist
- Confirm SNDAs are executed with major tenants.
- Review lender-approved form language.
- Evaluate tenant credit quality.
- Ensure consistency with mortgage covenants.