Subordination, Non-disturbance, and Attornment Agreements in a Construction Loan


Summary

This practice note explains the purpose and key components of a subordination, non-disturbance and attornment agreement (SNDA) in a construction financing transaction. An SNDA is an agreement entered into among a borrower/landlord, the landlord's lender, and a tenant providing for (i) the subordination of the tenant's rights and interest under its lease to the lien of the lender's mortgage, (ii) the lender's agreement not to disturb the tenant's occupancy and rights under its lease in the event of a foreclosure or other possession of the mortgaged property by the lender, subject to the express terms of the applicable lease (typically the tenant itself must not be in default under the lease), and (iii) the tenant's agreement to, upon a foreclosure or other possession, "attorn" to and recognize the lender or a successful purchaser at a foreclosure sale or other transfer as its landlord. See Subordination, Non-Disturbance, and Attornment Agreement (Construction Loan) for a sample ...