Updated on April 25, 2025

In commercial real estate, Subordination, Non-Disturbance, and Attornment Agreements (SNDAs) play a critical role in the relationship between tenants, landlords, and lenders.

An SNDA clarifies the rights and protections of tenants when a property is subject to financing.

This agreement can mitigate risks for tenants and ensure lenders can protect their interests in case of foreclosure.

Here, we’ll break down each element of an SNDA, explore how it benefits tenants, understand its importance to lenders, and clarify the purpose of these agreements.

What is an SNDA?

An SNDA is a contractual agreement between three parties: the tenant, the landlord, and the lender holding a mortgage on the property. The agreement is a combination of three provisions: subordination, non-disturbance, and attornment.

Each provision has a specific function, collectively securing the interests of both the tenant and the lender while maintaining stability in the landlord-tenant relationship in the event of foreclosure.

SNDA Provision Breakdown

Subordination: The subordination clause establishes that the tenant’s lease is subordinate to the lender’s mortgage on the property.

This means that the lender’s rights take precedence over the tenant’s leasehold rights if the landlord defaults on the mortgage.

By subordinating, the tenant acknowledges that their lease ranks below the lender’s interest in the property.

Subordination ensures the lender can maintain their priority claim on the asset, a necessary component for securing financing.

This also means that the lease can be wiped out in a foreclosure.

Non-Disturbance: The non-disturbance clause provides security for tenants by ensuring that if foreclosure occurs, the lender will not evict the tenant so long as the tenant continues to fulfill their lease obligations.

This provision is critical for tenants because it protects their right to occupy the property even if there is a change in ownership due to foreclosure.

Non-disturbance is beneficial to lenders as well, as it encourages tenant stability and consistent revenue, which may aid in repaying the loan.

Attornment: The attornment clause obligates the tenant to recognize the lender—or any other party taking possession after foreclosure—as their new landlord.

Attornment ensures a seamless transition in property management and rental income flow should the lender take control.

Tenants are expected to continue paying rent and fulfilling lease obligations to the new landlord, providing stability for the lender in the event of ownership transition.

How Do SNDAs Benefit Tenants?

For tenants, an SNDA provides peace of mind. By securing a non-disturbance agreement, tenants are protected from eviction following foreclosure, as long as they uphold their lease terms.

This assurance is especially valuable for long-term commercial tenants who may have invested significantly in their leased space or location.

With a non-disturbance agreement, tenants can maintain business continuity and avoid the financial loss associated with forced relocation.

Additionally, attornment provisions protect tenants by ensuring that, in most circumstances, they do not need to renegotiate lease terms if a new landlord assumes ownership.

SNDA Significance for Lenders

Lenders benefit significantly from SNDAs because they ensure that tenants recognize the lender’s priority interest in the property. The subordination clause, which is essential to most loan agreements, allows lenders to retain the option of foreclosure without automatically evicting tenants.

The attornment clause also protects lenders by securing a continuous revenue stream from tenants after a potential foreclosure, as tenants are required to recognize the lender as their new landlord and continue lease payments.

This predictable cash flow can strengthen the lender’s position and minimize the financial impact of a foreclosure.

The Purpose of SNDAs

The primary purpose of an SNDA is to clearly define the relationships and rights between tenants, landlords, and lenders in a property subject to financing.

SNDAs reduce legal uncertainties and ensure that, even in complex circumstances like foreclosure, all parties understand their rights and obligations.

By balancing the interests of tenants and lenders, SNDAs promote stability in commercial property agreements, making them valuable in maintaining both property value and tenant satisfaction.

Do SNDAs Vary by State?

While SNDAs generally serve the same purpose across states, specific terms and requirements can vary due to differences in state laws. For example, some states may impose additional tenant protections or require particular clauses in commercial leases that interact with SNDA terms.

Real estate law firms familiar with state-specific regulations can ensure that SNDA provisions comply with applicable state laws while safeguarding the interests of all parties.

SNDAs, however, are largely left to the parties to draft them.

In fact, California tries to limit its interaction or imposition of laws in the commercial landlord/tenant context – the parties are generally free to contract.

Protect Your Lease with Schorr Law

If you are negotiating a commercial lease or involved in property financing, an SNDA can provide essential protections and peace of mind. Schorr Law can come into a dispute and help  protect tenant rights while accommodating lender requirements.

Let Schorr Law guide you in navigating your lease agreement to secure your tenancy and protect your interests in any market conditions.

Contact Schorr Law today to ensure your lease is backed by legal protection from expert real estate attorneys in Los Angeles.

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