Oregon 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. Oregon Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a crucial legal document that regulates the rights and obligations of the tenant, lender, and landlord in the context of a commercial loan. It ensures that all parties involved understand their positions and responsibilities in case of lease termination, loan default, or foreclosure. This agreement consists of three main components: subordination, non-disturbance, and attornment. Subordination refers to the tenant's agreement to subordinate their leasehold interest to the lender's mortgage or deed of trust. This means that the lender's security interest takes priority over the tenant's rights and leasehold interest. By entering into this agreement, the tenant acknowledges that in the event of foreclosure or sale, their leasehold interest may be terminated or adversely affected. Non-disturbance is the landlord's promise not to disturb the tenant's possession and quiet enjoyment of the leased premises, even in the event of default or foreclosure by the lender. It offers protection to the tenant, ensuring they can continue to operate their business undisturbed by any actions taken by the lender. In exchange for this assurance, the lender requires the tenant to comply with the terms of the lease and cure any defaults within a specified timeframe. Attornment refers to the tenant's promise to recognize the lender or any subsequent owner of the property as the new landlord if the property is subjected to foreclosure or sold. This means that the tenant agrees to accept the new landlord and continue to perform its lease duties and obligations. The attornment clause ensures the continuity of the lease and protects the lender's investment should a foreclosure occur. Different types of Oregon SODA agreements can exist depending on the negotiations between the tenant, landlord, and lender. Some common variations include: 1. Limited SODA: This type of agreement grants partial non-disturbance protection to the tenant. In certain situations, such as lease termination due to default or foreclosure, the tenant may face certain limitations or conditions compared to a full non-disturbance agreement. 2. Full SODA: A full SODA agreement provides complete non-disturbance protection to the tenant. Regardless of the landlord's default or foreclosure actions, the tenant's rights to possess and enjoy the leased premises remain intact. 3. Conditional SODA: This type of agreement comes into effect only if specific conditions, often outlined in the agreement itself, are met. For example, the lender may require the tenant to maintain a certain level of sales or fulfill other financial obligations to invoke the benefits of non-disturbance. 4. Limited Subordination: In some cases, the tenant may negotiate a limited subordination clause. This means that certain obligations, such as the payment of rent or compliance with lease terms, remain superior to the lender's mortgage or deed of trust. The landlord and tenant specify these exceptions in the agreement. It is crucial for tenants, landlords, and lenders to consult legal professionals to draft a comprehensive Oregon SODA agreement that accurately reflects their specific needs and interests. This document ensures clarity and mitigates potential risks and uncertainties associated with commercial leases and loans.

Oregon Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a crucial legal document that regulates the rights and obligations of the tenant, lender, and landlord in the context of a commercial loan. It ensures that all parties involved understand their positions and responsibilities in case of lease termination, loan default, or foreclosure. This agreement consists of three main components: subordination, non-disturbance, and attornment. Subordination refers to the tenant's agreement to subordinate their leasehold interest to the lender's mortgage or deed of trust. This means that the lender's security interest takes priority over the tenant's rights and leasehold interest. By entering into this agreement, the tenant acknowledges that in the event of foreclosure or sale, their leasehold interest may be terminated or adversely affected. Non-disturbance is the landlord's promise not to disturb the tenant's possession and quiet enjoyment of the leased premises, even in the event of default or foreclosure by the lender. It offers protection to the tenant, ensuring they can continue to operate their business undisturbed by any actions taken by the lender. In exchange for this assurance, the lender requires the tenant to comply with the terms of the lease and cure any defaults within a specified timeframe. Attornment refers to the tenant's promise to recognize the lender or any subsequent owner of the property as the new landlord if the property is subjected to foreclosure or sold. This means that the tenant agrees to accept the new landlord and continue to perform its lease duties and obligations. The attornment clause ensures the continuity of the lease and protects the lender's investment should a foreclosure occur. Different types of Oregon SODA agreements can exist depending on the negotiations between the tenant, landlord, and lender. Some common variations include: 1. Limited SODA: This type of agreement grants partial non-disturbance protection to the tenant. In certain situations, such as lease termination due to default or foreclosure, the tenant may face certain limitations or conditions compared to a full non-disturbance agreement. 2. Full SODA: A full SODA agreement provides complete non-disturbance protection to the tenant. Regardless of the landlord's default or foreclosure actions, the tenant's rights to possess and enjoy the leased premises remain intact. 3. Conditional SODA: This type of agreement comes into effect only if specific conditions, often outlined in the agreement itself, are met. For example, the lender may require the tenant to maintain a certain level of sales or fulfill other financial obligations to invoke the benefits of non-disturbance. 4. Limited Subordination: In some cases, the tenant may negotiate a limited subordination clause. This means that certain obligations, such as the payment of rent or compliance with lease terms, remain superior to the lender's mortgage or deed of trust. The landlord and tenant specify these exceptions in the agreement. It is crucial for tenants, landlords, and lenders to consult legal professionals to draft a comprehensive Oregon SODA agreement that accurately reflects their specific needs and interests. This document ensures clarity and mitigates potential risks and uncertainties associated with commercial leases and loans.