Tenants Beware!

You have just spent quite some time battling with the landlord to negotiate a lease. Now you are finishing up the last details to finalize the deal. One of those details is a review of a subordination non-disturbance and attornment agreement (SNDA) that has been sent to you by the landlord's lender. Your main concern, especially if you are representing a tenant who is putting in expensive tenant improvements or expects to build a great deal of “locational goodwill,” is to preserve the lease in the event the landlord defaults on its loan. You do not want the lender to foreclose on the lease and kick the tenant out of the space. This two-part article focuses on how the SNDA can have other impacts that are at least as important as a tenant's concern not to be disturbed in its possession of the premises. This commentary is not intended to be an exhaustive discussion on everything that a tenant should look at when reviewing an SNDA. It offers only a review of some important issues that frequently arise when analyzing a typical SNDA prepared by a lender.