New York Subordination, Non-Disturbance, and Attornment Agreement of a Lease regarding a Commercial Loan

• Category: Loans and Lending
• State: Multi-State
• Control #: US-1176BG
• Format: Word; Rich Text

Description

The main purpose of this document is to subordinate the lease to the deed of trust or mortgage (if applicable), and have the tenant agree to be bound by the lease to a new owner in the event of foreclosure. The New York Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a crucial legal document that seeks to protect the rights and interests of the parties involved in a commercial loan transaction, specifically within the context of a lease. SODA agreements are commonly used in New York and hold great importance for landlords, tenants, and lenders. In its essence, the SODA establishes the relationship between the lender and tenant, ensuring that the lender's interests are prioritized in case of default or foreclosure. Let's examine the key elements of a New York SODA and briefly touch on the various types available: 1. Subordination: The subordination clause outlines the hierarchy of claims against the tenant and the leased property. It generally stipulates that the tenant's lease is subordinate to the lender's mortgage, meaning that if the property is foreclosed, the lender's rights take precedence. This protects the lender's ability to recoup their investment and ensures the stability of their position. 2. Non-Disturbance: Non-Disturbance clauses guarantee tenant protection in the event of a default or foreclosure by the landlord. It ensures that if the landlord fails to meet its obligations, the lender will not disturb the tenant's possession rights and will allow them to continue operating their business undisturbed. This provides security to the tenant, preventing unnecessary disruptions to their operations. 3. Attornment: The attornment provision requires the tenant to recognize and attorn to the lender as its new landlord upon foreclosure or transfer of the property. In this situation, the tenant becomes legally obligated to accept the new property owner as their landlord, abide by the terms of the lease, and continue making rental payments. Attornment provisions protect the lender's interest in ensuring the ongoing stability of the lease in case of a change in ownership. Different types of New York SODA agreements can vary based on unique circumstances or different parties involved. For example: — Landlord-FocuseSODADA: This typsodaDA primarily favors landlords by emphasizing the lender's rights and empowering the lender to take action against the tenant directly in the event of a default. — Tenant-FocuseSODADA: Conversely, this type of SODA prioritizes tenant protection and includes provisions that limit the lender's ability to terminate the lease or take immediate possession of the property in case of default. The specific terms and conditions of the New York SODA agreements can be customized based on the negotiations between the parties involved. It is crucial for both lenders and tenants to carefully review and understand the terms of the SODA to ensure their rights and interests are adequately protected in the event of default or foreclosure.

The New York Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a crucial legal document that seeks to protect the rights and interests of the parties involved in a commercial loan transaction, specifically within the context of a lease. SODA agreements are commonly used in New York and hold great importance for landlords, tenants, and lenders. In its essence, the SODA establishes the relationship between the lender and tenant, ensuring that the lender's interests are prioritized in case of default or foreclosure. Let's examine the key elements of a New York SODA and briefly touch on the various types available: 1. Subordination: The subordination clause outlines the hierarchy of claims against the tenant and the leased property. It generally stipulates that the tenant's lease is subordinate to the lender's mortgage, meaning that if the property is foreclosed, the lender's rights take precedence. This protects the lender's ability to recoup their investment and ensures the stability of their position. 2. Non-Disturbance: Non-Disturbance clauses guarantee tenant protection in the event of a default or foreclosure by the landlord. It ensures that if the landlord fails to meet its obligations, the lender will not disturb the tenant's possession rights and will allow them to continue operating their business undisturbed. This provides security to the tenant, preventing unnecessary disruptions to their operations. 3. Attornment: The attornment provision requires the tenant to recognize and attorn to the lender as its new landlord upon foreclosure or transfer of the property. In this situation, the tenant becomes legally obligated to accept the new property owner as their landlord, abide by the terms of the lease, and continue making rental payments. Attornment provisions protect the lender's interest in ensuring the ongoing stability of the lease in case of a change in ownership. Different types of New York SODA agreements can vary based on unique circumstances or different parties involved. For example: — Landlord-FocuseSODADA: This typsodaDA primarily favors landlords by emphasizing the lender's rights and empowering the lender to take action against the tenant directly in the event of a default. — Tenant-FocuseSODADA: Conversely, this type of SODA prioritizes tenant protection and includes provisions that limit the lender's ability to terminate the lease or take immediate possession of the property in case of default. The specific terms and conditions of the New York SODA agreements can be customized based on the negotiations between the parties involved. It is crucial for both lenders and tenants to carefully review and understand the terms of the SODA to ensure their rights and interests are adequately protected in the event of default or foreclosure.