Conditional Subordination Clause (Pro-Landlord) (Commercial Lease)

Summary

This conditional subordination clause may be included in a commercial lease to require the tenant to agree that the lease is subordinate to the landlord's mortgage or ground lease, provided that the tenant receives a subordination, non-disturbance, and attornment agreement from the lender or ground lessor. This template includes practical guidance, optional clauses, and drafting notes. If the landlord of commercial property obtains a loan secured by a mortgage on such property, the lender typically requires any existing leases to be subordinated to its mortgage. Likewise, if the property is subject to a ground lease, the ground lessor typically requires existing leases to be subordinate to the ground lease. In exchange for subordination, commercial tenants want a non-disturbance agreement from the lender or ground lessor, which is contained in a subordination, non-disturbance, and attornment agreement (commonly referred to as an "SNDA"). This example conditional subordination clause provides for subordination to the landlord's existing or future mortgages or ground leases provided that the tenant receives an SNDA. The clause is drafted from a landlord's perspective but contains drafting notes for both landlords and tenants. Conform the capitalized terms in the clause to the defined terms used in the lease in which the clause is included. For a full listing of key content relating to office leases, see Office Leasing Resource Kit. For a full listing of key content relating to industrial leases, see Industrial Leasing Resource Kit. For a full listing of key content relating to ground leases, see Ground Leasing Resource Kit. For templates of commercial leases, see Commercial and Industrial Lease, Office Lease Agreement, and Retail Lease Agreement (Long Form).