An agreement where a tenant's lease rights are made subordinate (junior) to a lender's mortgage on the property. This means the lender's claim takes priority if the landlord defaults on the loan.
A subordination, non-disturbance, and attornment (SNDA) agreement typically combines three concepts. Subordination makes the lease junior to the mortgage. Non-disturbance is the lender's promise not to terminate the lease if the lender forecloses. Attornment is the tenant's agreement to recognize the new owner as landlord after foreclosure. Without a non-disturbance clause, a tenant whose lease is subordinate to the mortgage can lose the lease entirely if the lender forecloses.
A landlord asks the tenant to sign a subordination agreement that does not include a non-disturbance provision. The landlord later defaults on the mortgage, the lender forecloses, and the new owner terminates the tenant's lease to re-lease the space at higher rates.
Never sign a subordination agreement without a non-disturbance clause (commonly called an SNDA). The non-disturbance provision protects your lease rights if the property changes hands through foreclosure. If your landlord pushes back, this is worth involving an attorney.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
