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  • John H. Pope

SNDA - What is it and why does it matter?

A Subordination, Non-Distrubance and Attornment Agreement (SNDA) is an agreement between a building's lender, tenant and landlord that protects the tenant in the even of a building foreclosure.

If no SNDA is in place, in the event of a foreclosure, the lender has the right to cancel the tenant’s lease. While for practical purposes, the lender is rarely going to cancel a paying tenant’s lease, there are some scenarios in which this can happen.

Why would the lender cancel the lease of a rent paying tenant?

  • The tenant is paying below market rent and there is demand for the space at a market rent

  • The tenant’s lease contains options that would deter other potential tenants from leasing the building

  • The tenant’s lease contains terms that make the building undesirable to a potential buyer of the building

  • The tenant’s credit is subpar making the building less attractive to potential buyers

  • The lender decides that the tenant’s use of the space conflicts with the highest and best use for the building

  • The tenant’s occupancy will make it difficult for another larger tenant to expand

  • The lender sees more demand for the building as a vacant building that they can sell to a user

Will most landlords and lenders agree to a SNDA?

The short answer is no. Most landlords don’t want to make this concession as it requires dealing with their bank and it isn’t “market” to grant a SNDA unless the tenant will occupy a large percentage of the building.

What about the document itself?

  • The SNDA is separate from the lease document but should be added to the lease as an exhibit

  • Make sure it gets fully executed and memorialized prior to or at the same time as lease signing

  • Make sure the SNDA requires future lenders to agree to it

  • Like any contract, look at the specific language within the SNDA as all are slightly different

  • Have a real estate attorney review both the lease and your SNDA to make sure your rights are protected

What do you do if you can’t get a SNDA agreed to?

It is important to be aware of the landlord’s capital position. Have your representative research the debt on the building and take a look at the building’s occupancy and tenant mix to provide you an opinion as to the risk of a foreclosure. After gathering the information, make a calculated decision as to whether or not to move forward with the lease.

John H. Pope


Pope Corporation

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