A Delaware Subordination Nondisturbance and Attornment Agreement (SODA) is a legal document commonly used in commercial real estate transactions. It establishes the rights and obligations of three parties involved in a property lease or mortgage: the lender, the landlord, and the tenant. By providing clarity on each party's interests and responsibilities, an SODA protects the rights of all parties and ensures the smooth continuation of lease agreements even in the event of default or foreclosure. In a Delaware SODA, the term "subordination" refers to the agreement by the tenant that its leasehold interest will be secondary to the rights of the lender/mortgagee. This means that in case of default, the lender can foreclose on the property and extinguish the leasehold interest of the tenant. Subordination ensures that the lender's rights take precedence over the tenant’s. The "nondisturbance" provision in the SODA guarantees the tenant that, if the property is foreclosed or transferred to a new owner, the tenant's lease will remain in effect and the new owner or lender will not disturb the tenant's occupancy rights. It offers protection to the tenant from any potential disruption of their business due to changes in ownership or foreclosure. The "attornment" part of the SODA states that the tenant will recognize and attorn to a new landlord or lender, if required. It means that in case the property is sold or there is a change in ownership, the tenant agrees to recognize the new owner or lender as the landlord or mortgagee and continue paying rent or other obligations to them. This provision ensures the lease remains valid and enforceable regardless of changes in ownership. There can be various types of Delaware Subordination Nondisturbance and Attornment Agreements, depending on the specific circumstances of the lease or mortgage. For example, there may be an SODA between a tenant, a landlord, and a lender, or between a tenant, a landlord, a lender, and a ground lessor (in case of ground lease arrangements). Each type of SODA will tailor the agreement to the unique needs and interests of the parties involved, while still adhering to the basic principles of subordination, nondisturbance, and attornment. In summary, a Delaware Subordination Nondisturbance and Attornment Agreement is a legal contract that establishes the hierarchy of rights between a lender, landlord, and tenant in a property lease or mortgage. It ensures the lender's rights come first, protects the tenant from lease termination in case of foreclosure, and requires the tenant to recognize and cooperate with new owners or lenders. Different types of Sodas may exist depending on the specific parties involved in the transaction.
Delaware Subordination Nondisturbance and Attornment Agreement
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