November 01, 2025

What is an SNDA in Real Estate?

In real estate, an SNDA (Subordination, Non-Disturbance, and Attornment Agreement) is a legal contract typically signed between a tenant, a landlord, and the landlord's lender. This agreement ensures the tenant's lease remains intact, even if the landlord defaults or the lender forecloses on the property. The attornment agreement within the SNDA stipulates that the tenant acknowledges and agrees to continue the lease with the new property owner (typically the lender) after a foreclosure. The non-disturbance provision ensures the tenant's occupancy rights are protected during such transitions, meaning the lender agrees not to disturb the tenant’s lease as long as they comply with the lease terms.

How Does an Attornment Agreement Work?

The attornment agreement is a key component of the SNDA, ensuring that the tenant agrees to recognize a new landlord. This happens when the lender forecloses on the property or when a foreclosure sale occurs. The tenant must attorn (or consent) to the new property owner, whether that’s the lender or a third party purchasing the property through foreclosure. This agreement provides clarity and ensures that the tenant’s rights to occupy the commercial property are honored by the new owner, as long as the tenant continues to meet the lease obligations.

Without an attornment provision, the tenant could be left in a precarious position if the property changes ownership. For instance, the new owner may not honor the previous lease, leaving the tenant vulnerable to eviction. The attornment agreement mitigates this risk by explicitly outlining the legal relationship between the tenant and the new landlord, providing the tenant with peace of mind.

The Role of the Non-Disturbance Provision

The non-disturbance provision is another crucial element of the SNDA. This clause ensures that the tenant’s right to occupy the leased property will not be disturbed, even in the event of a foreclosure or change in property ownership. In essence, the non disturbance agreement guarantees that the tenant’s rights are protected, and they can continue occupying the space under the terms of their lease, as long as they remain in compliance.

For example, if a lender’s security interest is enforced due to the landlord’s default or if the lender's mortgage lien is triggered, the non-disturbance provision protects the tenant from being forced out of the property by the lender or the new property owner. The lender agrees not to disturb the tenant’s lease, as long as the tenant is paying rent and adhering to the lease terms.

Why Are SNDAs Important for Commercial Tenants?

For commercial tenants, an SNDA provides critical protection and clarity in case of a landlord default or foreclosure sale. The non disturbance and attornment clauses within the SNDA ensure that the tenant’s lease remains valid even when ownership of the property changes hands. This type of agreement is particularly important for tenants in commercial real estate, where long-term leases and significant investments are at stake.

Without an SNDA, a tenant could be vulnerable to having their lease terminated by a new property owner or lender, especially in the event of a foreclosure. The SNDA creates a legal relationship between the tenant and the lender or new owner, ensuring that the tenant’s tenant’s lease and occupancy rights are respected.

In essence, an SNDA gives tenants the confidence that their lease term is secure, even if the landlord faces financial difficulties or lender’s form is activated. It also clarifies the priority of the tenant’s lease in relation to the lender’s rights and the property’s security instrument.

What is the Subordination Clause in an SNDA?

The subordination clause within an SNDA is essential for determining the order of priorities between the tenant’s lease and the lender’s rights over the property. Essentially, the subordination clause states that the tenant’s lease is subordinate (or secondary) to the lender’s mortgage, meaning the lender’s rights take precedence if the property goes into foreclosure.

However, the non disturbance provision ensures that even if the tenant’s lease is subordinate to the lender’s mortgage, the tenant’s right to occupy the property remains unaffected as long as they adhere to the terms of the lease. This means that while the lender may have a higher claim to the property, the tenant will still be able to continue their commercial lease uninterrupted.

The subordination provision plays a critical role in the security interests of lenders. It makes clear that the property owner’s lease will not block the lender’s rights to foreclose on the property. However, it’s important to note that the tenant’s tenant’s agreement is also included, so the lender’s rights are exercised without infringing on the tenant’s rights as long as they are compliant with the lease.

The Three-Party Agreement: Tenant, Landlord, and Lender

An SNDA is often referred to as a three-party agreement, as it involves three distinct parties: the tenant, the landlord, and the lender. In this agreement, all parties work together to define the terms under which the tenant’s rights are protected, even if the landlord defaults or the property is sold through a foreclosure sale.

The lender’s agreement to the terms ensures that the tenant's rights are safeguarded during periods of financial instability, allowing tenants to remain in the leased property under the existing lease terms despite changes in property ownership. This subordination non disturbance agreement, thus, plays a crucial role in resolving any potential conflicts between the rights of the lender, the landlord, and the tenant.

The lender’s mortgage lien is prioritized above the tenant’s lease, but with the non-disturbance provision, the lender ensures that the tenant will not be forced to vacate the property, even if the property goes through a foreclosure. This establishes a legal relationship between the three parties, where each one’s interests are respected.

How Does the Subordination Non-Disturbance Agreement Protect Tenants?

The subordination non disturbance clause is particularly beneficial for tenants who are renting in commercial properties that are financed by a lender. In the event of a lender forecloses on the property or the landlord defaults, the non disturbance agreement ensures that the tenant’s lease will remain valid and that they can continue to occupy the space as long as they continue to meet the obligations of their lease.

For instance, in the event of foreclosure, the tenant will not be evicted or forced to renegotiate their lease. The lender, recognizing the tenant’s lease, agrees not to disturb the tenant’s use of the space. This protects the tenant from any disruption in their business operations, which is crucial for those in long-term commercial leases or with significant investments in the property.

In addition to this protection, the attornment agreements ensure that if the new landlord takes over the property, the tenant will automatically recognize them as the new landlord under the same lease terms. This tenant agrees provision allows for a smooth transition without disruption to the tenant’s use of the property.

The Role of the Lender's Security Interest and Foreclosure Sale

When a property is foreclosed, the lender typically takes possession of the property in place of the previous owner. If a tenant’s commercial lease is still active, it could potentially conflict with the lender’s interest in the property, especially if the tenant is not a party to an SNDA.

In cases where an SNDA is in place, the lender's security interest will take precedence over the lease, but the non-disturbance provision ensures that the tenant’s ability to stay in the leased property is not jeopardized. This means that even if the lender’s mortgage lien is enforced, the tenant can continue to operate their business without fear of eviction, as long as they meet their lease obligations.

The foreclosure sale would then be the lender’s means of recouping the investment, but the tenant’s occupancy rights, secured through the SNDA, would remain intact as long as the terms of the lease are being followed. In short, the tenant's agreement remains valid, even in the event of a foreclosure sale or landlord default.

What Happens When a Landlord Defaults?

When a landlord defaults on their mortgage, it can cause significant uncertainty for tenants. Without a non-disturbance agreement, tenants may face eviction or be forced to renegotiate their lease with the new owner or lender. However, with an SNDA in place, tenants are guaranteed that their commercial lease will remain undisturbed, even if the landlord defaults or the property goes through foreclosure.

The non-disturbance provision is the key element that ensures the tenant can continue their tenancy under the same terms and conditions, regardless of who owns the property. The attornment agreement further supports this by ensuring that the tenant acknowledges and agrees to continue the lease with the new landlord, should the property change hands due to foreclosure or sale.

Without the SNDA, tenants could face the risk of losing their business location, particularly if the landlord has defaulted on their obligations. The tenant’s lease may no longer be honored by the new landlord, leaving the tenant vulnerable. An SNDA provides legal protection against such risks, allowing tenants to focus on their business without the looming threat of eviction.

Commonly Referred to Terms: Subordination, Attornment, and Non-Disturbance

The terms subordination, attornment, and non-disturbance are often used together in real estate law, especially in relation to commercial property leases.

Subordination refers to the tenant’s lease being placed beneath the lender’s security interest in terms of priority.
Attornment is the tenant’s agreement to recognize the new property owner (usually the lender) after foreclosure or sale.
Non-disturbance ensures the tenant’s lease will not be disrupted, even if the property changes ownership.

These terms are typically found together in an SNDA, which provides a framework for protecting tenants while balancing the lender’s interest in securing the property’s value. These provisions create a sense of security for tenants in commercial leases, ensuring that their occupancy rights are not violated due to actions outside their control, such as the landlord defaulting.

If you're planning to invest in commercial real estate, or if you're already a property owner, understanding your rights and obligations is crucial. For more helpful tips on commercial property leases, be sure to check out our latest blog on “Commercial Real Estate Insights”, where we cover key strategies for successful property management.

Negotiating an SNDA: What Tenants Should Know

When negotiating an SNDA, tenants should be sure to review all the terms carefully to ensure that their rights are fully protected. The tenant's rights should be clearly outlined, especially regarding the non disturbance provision and the attornment agreement. It is crucial that the subordination clause is balanced and fair, so the tenant is not left in a vulnerable position if the landlord defaults or the lender forecloses.

Tenants should also ensure that the tenant agrees clause clearly defines the terms under which they will recognize the new owner after foreclosure. By understanding these key provisions and negotiating the terms, tenants can ensure that their business remains secure, regardless of any changes in property ownership.

In addition, tenants may want to seek legal advice or assistance from commercial lenders to ensure that the lender’s form aligns with their interests. It's important that the subordination non disturbance terms are negotiated in a way that provides the tenant with adequate protection without unduly favoring the lender.