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Understanding Subordination Non-Disturbance and Attornment Agreements

By Elizabeth Whitman | December 3, 2018

Commercial tenants may be perplexed when months or years after signing their leases they are asked to sign a Subordination Non-Disturbance and Attornment Agreement (SNDA). The landlord may tell tenants simply that they “need the SNDA for the mortgage lender.”

Tenants may not have a choice but to sign the SNDA. A clause in their leases may require that they sign an SNDA. The SNDA form may even be attached to the lease or the lender may tell tenants that the SNDA is nonnegotiable. The tenant may even have already signed another SNDA like it when it signed its lease.

Still Tenants should know what the SNDA means and how it affects their leases. A good starting place is to explain the purpose of each of the legal terms in the name of the SNDA–subordination, non-disturbance, and attornment.


The plain meaning of subordination is to put something in a lower position or rank. And, a subordination agreement does that. It puts the lease below the mortgage loan in priority. Mortgage lenders want the leases to be subordinate to the mortgage. That way, the mortgage loan is paid first in case of a foreclosure.

From a practical matter, subordination rarely affects tenants, even though technically, their leases could be terminated in a foreclosure or bankruptcy. Even if the property goes through a foreclosure or bankruptcy, the new owner usually wants to keep the tenants rather than to find new ones. However, the subordination can be used force a tenant with below-market lease terms to renegotiate its lease.


Non-disturbance agreements assure that the tenant will continue their leases if the property is involved in a foreclosure. The lender agrees that it will let the tenant stay at the property. In exchange the tenant will continue to perform under its lease and usually to pay rent to the lender.

Usually tenants will hardly notice when a property becomes involved in a foreclosure or bankruptcy. It is important to the lender that the property continue to operate smoothly, and most will not let a foreclosure or bankruptcy interfere with property operations.

However, it’s not unusual for tenants to become disgruntled before the property goes into foreclosure or bankruptcy. A landlord having financial troubles may cut back on services or defer building maintenance. The building may look shabby and repairs may take longer. Elevators may break down more frequently due to lack of regular maintenance. Landlord’s failures might even breach lease terms.

Tenants may be seeking a way to get out of their leases may see the foreclosure or bankruptcy as their chance to get out of their leases. A non-disturbance agreement usually prevents those tenants from leaving. Tenants who want to leave a declining building should plan ahead and to renegotiate lease terms or with their landlord or to declare a landlord default and terminate their leases, before things get so bad that the property is involved in a foreclosure or bankruptcy.


Most tenants won’t be familiar with, attornment, a concept which dates to the English feudal system. Under English common law, attornment was the tenant’s acknowledgment and acceptance of a new lord.

The term’s meaning in an SNDA is similar. The tenant is agreeing that it will recognize the mortgage lender as its new landlord if the property goes through foreclosure. Frequently, attornment clauses will go further and require tenants to accept any new owner of the property as their landlord.

Negotiating SNDA Provisions

Many tenants ignore SNDA language when negotiating their commercial leases. But that is the best time for the tenants to negotiate the SNDA–when the landlord is financially healthy and the tenant has the most bargaining power.

Ideally, the lease will have an SNDA form attached. If a lender offers a more comprehensive SNDA, the tenant then will have some ability to negotiate it.

Tenants should focus on the scope of the subordination and attornment. Does it apply only to the current mortgage lender? Or, will it apply to new mortgage loans or other financial liens, also? Landlords and lenders will want the scope as broad as possible. For tenants, a narrower scope is better.

Tenants should make sure that the non-disturbance language is mutual. The lender can evict a tenant that doesn’t pay rent. Likewise, tenants shouldn’t be required to stay at the property if the landlord or lender has breached the lease.

Who Benefits from SNDAs?

Tenants should remember that SNDAs mostly help the landlord and its mortgage lender.  Most commercial leases have SNDA language. However, tenants can and should negotiate the most favorable terms possible when they negotiate their leases, focusing on the non-disturbance language. By negotiating these terms up-front, tenants can prevent a nasty surprise should the landlord have financial difficulties.

Elizabeth Whitman is an attorney and broker who has represented clients in more than $1.3 billion in real estate transactions.Elizabeth's law firm, Whitman Legal Solutions, LLC, is located in suburban Washington, DC and represents real estate owners and securities sponsors throughout the nation.
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