SNDA
Drafts a tri-party SNDA subordinating a tenant's lease to a lender's mortgage lien while securing non-disturbance protections and attornment obligations.
Prerequisites
Collect before drafting:
- Lease — executed lease with all amendments (names, premises, term, rent, renewal options, existing subordination language)
- Loan documents — note, mortgage/deed of trust, loan agreement (lender name, principal, rate, legal description, recording info)
- Chronology — whether lease predates or postdates mortgage recording
- Authority — signatory authority confirmation for all three parties
Quick Start
- Extract and cross-verify key terms from lease and loan documents
- Flag discrepancies between documents before drafting
- Draft SNDA sections in order below
- Confirm subordination conditionality with user
- Present security deposit and TI allowance options for negotiation
- Verify state-specific notarial and recording requirements
Workflow
1. Document Review & Extraction
Cross-verify across all documents:
| Element | Source | Verify |
|---|
| Party legal names & addresses | Lease + Loan docs | Exact match |
| Property legal description | Lease + Mortgage | Consistent |
| Leased premises (suite, SF, APN) | Lease | Within mortgaged property |
| Lease dates & renewal options | Lease | Current and complete |
| Rent amounts & schedule | Lease | Current period confirmed |
| Loan amount, rate, terms | Note/Loan agreement | Match mortgage |
| Mortgage recording info | Mortgage | Book/page, date, county correct |
| Security deposit; TI/free rent status | Lease | Actual amounts, performed or remaining |
Flag discrepancies before proceeding.
2. Recitals
Establish:
- Party legal names, entity types, addresses
- Property address + full legal description (APN, county, state)
- Lease ID: date, parties, premises, term, recorded memorandum if any
- Loan ID: date, principal, mortgage recording info
- Chronological priority statement
- Lender requires subordination as loan condition; tenant requests non-disturbance as consideration
3. Subordination
- Lease subordinate to mortgage lien and all advances (obligatory and optional)
- Extends to renewals, modifications, consolidations, replacements, extensions, increases
- Effective regardless of lease/mortgage chronology
- Tenant acknowledges subordination as material inducement for loan
- Conditionality: subordination effective simultaneously with non-disturbance (confirm parties' intent)
- Multi-parcel provisions if applicable (partial releases, cross-collateralization)
4. Non-Disturbance
| Topic | Treatment |
|---|
| Core covenant | No disturbance if tenant not in default beyond cure periods |
| Prior landlord liability | Successor NOT liable for prior landlord acts/omissions |
| Prepaid rent | Successor not bound by rent paid >1 month ahead |
| Offsets/defenses | Successor not subject to claims against prior landlord |
| Security deposit | Honored only to extent actually received by successor |
| TI allowance / free rent | Address whether successor assumes unperformed concessions |
| Runs with land | Binds successors, assigns, foreclosure purchasers, deed-in-lieu grantees |
5. Attornment
- Tenant unconditionally attorns to successor landlord (foreclosure, deed in lieu, other enforcement)
- Self-operative — no further instruments required
- Confirmation instrument within 10–30 days if requested (no increased obligations)
- Lease continues on original terms except as modified by SNDA
- All tenant rights and options preserved subject to non-disturbance limitations
6. Representations & Warranties
Landlord: lease in force, no modifications except scheduled, no defaults, rent current, no assignment except to lender, authority to execute.
Tenant: lease is entire agreement, no defenses/offsets against rent, possession accepted, no undisclosed assignments/sublets, TI/concession status confirmed, authority to execute.
Lender: authority to execute and grant non-disturbance, status as mortgage holder.
7. Lender Cure Rights
- Tenant must copy lender on landlord-default notices
- Tenant may not terminate or exercise offset without giving lender cure opportunity
| Default Type | Lender Cure Period |
|---|
| Monetary | 30 days after landlord's cure period expires |
| Non-monetary | 60–90 days (longer if cure requires possession, provided diligent pursuit) |
- Lender may enter premises to cure; cure does not constitute lease assumption
8. Lease Modification Restrictions
- No material modification, termination, surrender, or rent reduction without lender consent
- Exceptions: ministerial amendments; changes improving lender security
- Unauthorized modifications void as against lender
- Address whether existing lease options (renewal, expansion) require lender consent
9. Administrative Provisions
Notices (addresses, delivery methods, 3-business-day rule) · Governing law (property state) · Jurisdiction (property county) · Counterparts and e-signatures · Amendments (all three parties) · Severability · SNDA controls over lease on SNDA matters · Binding on successors · Recordation rights
10. Execution
- Tri-party signature blocks with name, title, date
- Entity-appropriate execution format
- Notarial acknowledgments per property-state law (required if recording)
Pitfalls
- Conditional subordination: always confirm parties intend subordination conditioned on non-disturbance before making self-executing
- Security deposit / TI allowance: most-negotiated provisions — present options, do not assume
- Document discrepancies: never draft over mismatches between lease and loan documents
- Recording requirements: vary by jurisdiction — confirm county recorder format
- Defined terms: cross-check for consistent usage throughout
- Notarial form: verify state-specific acknowledgment requirements before finalizing
