An SNDA is a three-party agreement among a tenant, a landlord, and the landlord's mortgage lender that combines three promises: subordination, non-disturbance, and attornment. It fixes what happens to a commercial lease if the landlord defaults on its loan and the lender forecloses, protecting the lease from being wiped out.
How Does an SNDA Work?
An SNDA works by binding three parties to a set of if-then promises about foreclosure. The tenant agrees its lease is subordinate to the mortgage. The lender agrees not to disturb the tenant's occupancy after foreclosure. The tenant agrees to attorn to, meaning recognize, the lender or its buyer as the new landlord. Each promise resolves a specific risk.
Absent an SNDA, subordination and foreclosure interact in a way that can destroy a lease. A lease recorded or dated after the mortgage is junior to it, so a foreclosure can extinguish that lease entirely. The non-disturbance clause is the tenant's protection against that outcome, and it is the clause tenants negotiate hardest, since the other two mostly protect the lender.
Clause | Who it protects | What it does |
Subordination | Lender | Places the lease below the mortgage in priority |
Non-disturbance | Tenant | Keeps the lease alive through foreclosure if the tenant is not in default |
Attornment | Lender or buyer | Makes the tenant recognize the foreclosure buyer as landlord |
Why the SNDA Matters
An SNDA matters because a commercial lease and the loan on the building can quietly conflict, and foreclosure is when that conflict surfaces. A lender pricing a loan wants the leases subordinate and the tenants bound to it after foreclosure. A tenant investing in buildout wants a guarantee it will not be evicted if the landlord fails. The SNDA is where those interests are reconciled in writing.
Lenders routinely require SNDAs from major tenants as a condition of funding, and tenants with significant improvement dollars at stake insist on non-disturbance before signing a lease. As practitioners at McLane Middleton and BFV Law note, without an SNDA a foreclosure can leave a paying tenant either evicted or stripped of the lease terms it bargained for. The quotable rule: subordination is the price the tenant pays, and non-disturbance is what the tenant buys with it.
Example
An SNDA earns its place when a foreclosure would otherwise erase a valuable lease. Consider a tenant that signs a 10-year lease and spends on buildout, in a building later refinanced by a lender whose mortgage predates the lease.
Item | Value |
Lease term | 10 years |
Base rent | $30.00 per sq ft on 20,000 sq ft |
Annual rent | $600,000 |
Tenant buildout invested | $500,000 |
Mortgage priority | Senior to the lease |
If the landlord defaults in year 3 and the lender forecloses, the lease is junior and could be extinguished, exposing the tenant's $500,000 buildout and its below-market $600,000 annual rent. With a signed SNDA carrying non-disturbance, the lease survives foreclosure so long as the tenant is not in default. The tenant keeps 7 remaining years at $600,000 a year, and the foreclosure buyer inherits a paying tenant instead of a vacancy.
Variations and Edge Cases
SNDAs vary by which party's form controls, whether the lease is already senior, and how much the non-disturbance clause carves back. The variants below show where the standard SNDA bends.
Variant | Treatment |
Lender-form SNDA | Drafted to favor the lender; non-disturbance is often narrow and conditional |
Tenant-negotiated SNDA | Broadens non-disturbance to preserve renewal, expansion, and offset rights |
Automatic subordination clause | A lease provision that subordinates without a separate SNDA, leaving the tenant unprotected |
Ground lease SNDA | Coordinates a leasehold mortgage, the fee lender, and the ground lessee |
Pre-existing senior lease | A lease recorded before the mortgage is already senior, changing the negotiation |
SNDA vs Estoppel Certificate
An SNDA is often confused with an estoppel certificate, and deals frequently use both at once. An SNDA is forward-looking: it sets the tenant, landlord, and lender's rights if a future default or foreclosure occurs. An estoppel certificate is backward-looking: the tenant confirms where the lease stands today, such as current rent, term, and default status.
The SNDA governs future contingencies; the estoppel verifies present facts. A lender requires an SNDA so a foreclosure would not wipe out a valuable lease. A buyer collects estoppels to confirm the income it is purchasing. Same closing package, different jobs: one allocates the future, the other certifies the present.
Frequently Asked Questions
What is an SNDA in commercial real estate?An SNDA is a three-party agreement among a tenant, a landlord, and the landlord's mortgage lender covering subordination, non-disturbance, and attornment. It fixes what happens to a commercial lease if the landlord defaults on its loan and the lender forecloses on the property.
What do the three parts of an SNDA mean?Subordination places the lease below the mortgage in priority. Non-disturbance keeps the lease alive through foreclosure if the tenant is not in default. Attornment makes the tenant recognize the foreclosure buyer as its new landlord. Together they resolve how a lease survives a lender takeover.
Who requires an SNDA and why?Lenders require SNDAs from major tenants as a funding condition to keep leases in place and tenants bound after foreclosure. Tenants with heavy buildout demand non-disturbance before signing, so a landlord default cannot evict them or strip their negotiated lease terms.
Related Terms
Estoppel Certificate
Ground Lease
Permanent Loan
Due Diligence
Senior Debt