CRITICAL DOCUMENT NEEDED BY A TENANT
If you are a Tenant, you need an SNDA in these uncertain times! Otherwise, you could be evicted and lose your security deposit.
An SNDA is a Subordination Nondisturbance and Attornment Agreement. It's a three-party agreement among the landlord, the tenant, and the lender, whereby the lender agrees that so long as the tenant pays the rent under the lease, that the lender will honor the lease. That also binds the lender's assignees. That document must be notarized and recorded in the real property records.
With the tremendous rise in foreclosures in the commercial arena, unsuspecting tenants are being evicted or forced to pay up to banks or their successors for the bad acts of their previous landlords.
Specifically, if a tenant's lease is junior to their landlord's deed of trust, or if their lease contains subordination language that makes it junior, when a lender or the lender's assignee foreclose, your lease rights may be wiped out. Further, that lender or their assignee could come after you for replenishing the security deposit, or to present you with a new lease at higher rates. Finally, they may not recognize your security deposit in the negotiations for a new lease.
This was never a concern in the past. However, with the rise in foreclosures, it seems prudent that any tenant wanting to execute a lease today consider asking their landlord to ask its lender for an SNDA. In the past, only the largest big box tenants with expensive tenant improvements would consider doing such a document.
This is a complicated area of the law and is highly contentious. Should you need additional assistance, I or another attorney at Marquis Aurbach Coffing would be happy to assist you.
Ms. Drury is a Shareholder in the firm of Marquis Aurbach Coffing in Las Vegas, Nevada, and is chairperson of their transactional department. Ms. Drury was recently named by Chambers USA as a Leader in the Field of Real Estate for 2012. Drury was named a Leader in the Field of Real Estate for 2011 by Chambers International and was also named by Best Lawyers in America in the specialties of Corporate Law and Real Estate Law for 2011 and 2012. Ms. Drury's practice focuses on transactions, with an emphasis in real estate. She documents and oversees entity formation, land and business acquisition, construction agreements, loans (construction and permanent), general operational and contract needs, and the ultimate sale of land or improved properties and businesses. Ms. Drury serves on the Executive Committees of the State Bar of Nevada's Real Property Law Section and Business Law Section, which, among other things, draft statutes for consideration and adoption by the legislature of the State of Nevada. Prior to joining Marquis Aurbach Coffing, Ms. Drury served as Associate General Counsel at Station Casinos, Inc. Ms. Drury has a Bachelor of Arts in International Relations and Print Journalism from the University of Southern California, with a minor in Business Administration. She has a Juris Doctor Degree from the University of California, Hastings College of the Law.