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A Tenant's Perspective on SNDAs: Non-Disturbance Is Not Enough
The subordination, non-disturbance and attornment agreement (SNDA) is common to most commercial leasing and real estate financing transactions. The SNDA regulates two competing interests in the same property — tenant's right to possess its premises pursuant to its lease and mortgage lender's security interest in that same premises.
Despite the agreement's title, the most important provision of a subordination, non-disturbance and attornment agreement from a tenant's perspective is neither subordination, non-disturbance nor attornment. The most consequential provisions of the SNDA deal with the recognition of tenant's lease agreement. Though an agreement by mortgage lender not to disturb tenant's possession following a foreclosure is certainly beneficial to the tenant, non-disturbance alone is not enough. The savvy tenant will want the full terms and conditions of its lease to be recognized.
This article outlines the basic elements of an SNDA and will explain the differences between the concepts of "non-disturbance" and "recognition," while contending that lease recognition is more important to the tenant than not having its possession disturbed. In making that argument, we will explore the differences between covenants that "run with the land" and those that are personal to the person who makes them. This article will also discuss SNDA provisions that limit full recognition of a tenant's lease and will offer practical tips on negotiating those provisions.
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