Commercial leases often contain an SNDA. It is an agreement between the tenant and the landlord that describes the specific rights of the tenant and the landlord. The SNDA may also provide information on other third parties such as the lender`s lender or the purchaser of the property. There are three parts: the subordination clause, the non-interference clause and the attornation clause. Attornment in a commercial lease is similar. The attorning clause in an SNDA requires the tenant to recognize the new owner of the property as its owner, whether the new owner purchased the property through a normal sale or enforced execution. The clause also requires the tenant to continue to pay rent to the new landlord for the remainder of the tenancy period. The „Attornment“ part of the agreement, which is perhaps the most confusing part of an SNDA, simply means that the tenant agrees to recognize the buyer as a new owner under the lease upon the forced sale. This is only one way to formalize the legal relationship between an owner and the new owner of the property.
If you have any questions about Estoppels tenants and subordination, dysfunction and atornment agreements, please contact Wally Cupkovic or Jack Parrino in our Chicago office or Matt Buesching in our St. Louis. How does the SNDA do all this? Subordination, non-interference and attornment are closely related concepts. Subordination is the tenant`s agreement that his shares be subordinated to those of the lender under the lease. Of course, in many situations, the mortgage is already higher depending on when the mortgage was registered and when the lease was registered or whether the tenant took possession of the property. But the lender will want to ensure that its priority will not be lost if the loan documents are changed, and both the lender and the lessor will want to protect the lessor`s ability to refinance with another lender. Estoppel and SNDA tenants may also include provisions binding the tenant after the tenant is signed and SNDA. For example, once the tenant has signed estoppel or SNDA, they must be kept with the rental records so that the tenant can meet his terms, as if he were part of the tenancy agreement himself. The „non-trouble“ part of the agreement, also known as the „right to silent enjoyment,“ is exactly as stated in its name.
Upon entering an SNDA, the lender agreed that the lender or other buyer would not „interfere“ with the tenant in the sale of the property of the tenancy through a forced sale as long as the tenant is not late and that rent continues as if the enforcement had never taken place. A year later, the Ohio Supreme Court found, in another lease agreement, that a particular language in the lease was setting up Attornment`s self-order. Liberal Savings – Loan Co. v. Frankel Realty Co. (1940), 137 Ohio St. 489, 30 N.E. 2d 1012. The opinion of Liberal Savings and Loan Co.
also indicated that modern legislative amendments render the entire doctrine of the Attornment doctrine obsolete, even without a specific language of attraction in the lease.