Tennessee 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. A Tennessee Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a legal document executed between three parties: the lender providing the commercial loan, the landlord of the commercial property, and the tenant of the leased space. This agreement outlines the respective rights and obligations of each party in the event of a default or foreclosure of the commercial loan. In Tennessee, there are typically three types of Sodas related to commercial loans: 1. Subordination Agreement: The subordination aspect of the SODA refers to the tenant's agreement to subordinate their lease to the lender's lien or security interest on the property. It means that, in the event of foreclosure or default, the lender's rights take precedence over the tenant's lease. This agreement protects the lender's interest and ensures that it can sell the property without any leasehold claims hindering the process. 2. Non-Disturbance Agreement: The non-disturbance element of the SODA assures the tenant that, despite any foreclosure or default by the borrower, their lease will remain in force and valid. This means that the new owner, typically the lender, will recognize the tenant's rights under the lease and not disturb their occupancy. This non-disturbance provision is crucial for tenants to secure their continued use and enjoyment of the commercial space. 3. Attornment Agreement: The attornment clause outlines the tenant's obligation to recognize and accept a new owner, usually the lender, as their landlord in the event of foreclosure or default. The tenant agrees to attorn to the new owner and continue paying rent and fulfilling their lease obligations as if there were no change in ownership. This agreement allows the lender, upon becoming the landlord, to maintain continuity of rental income from the tenant and mitigate any potential disruptions to the tenancy. Together, the Subordination, Non-Disturbance, and Attornment Agreements aim to protect the rights and interests of both the lender and the tenant in Tennessee's commercial loan transactions. The lender is granted priority status over the leasehold estate in case of foreclosure, while the tenant is assured of their right to remain in the leased premises and continue their business operations undisturbed, regardless of ownership changes. These agreements provide a measure of security and stability for all parties involved in the commercial loan and lease arrangement.

A Tennessee Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a legal document executed between three parties: the lender providing the commercial loan, the landlord of the commercial property, and the tenant of the leased space. This agreement outlines the respective rights and obligations of each party in the event of a default or foreclosure of the commercial loan. In Tennessee, there are typically three types of Sodas related to commercial loans: 1. Subordination Agreement: The subordination aspect of the SODA refers to the tenant's agreement to subordinate their lease to the lender's lien or security interest on the property. It means that, in the event of foreclosure or default, the lender's rights take precedence over the tenant's lease. This agreement protects the lender's interest and ensures that it can sell the property without any leasehold claims hindering the process. 2. Non-Disturbance Agreement: The non-disturbance element of the SODA assures the tenant that, despite any foreclosure or default by the borrower, their lease will remain in force and valid. This means that the new owner, typically the lender, will recognize the tenant's rights under the lease and not disturb their occupancy. This non-disturbance provision is crucial for tenants to secure their continued use and enjoyment of the commercial space. 3. Attornment Agreement: The attornment clause outlines the tenant's obligation to recognize and accept a new owner, usually the lender, as their landlord in the event of foreclosure or default. The tenant agrees to attorn to the new owner and continue paying rent and fulfilling their lease obligations as if there were no change in ownership. This agreement allows the lender, upon becoming the landlord, to maintain continuity of rental income from the tenant and mitigate any potential disruptions to the tenancy. Together, the Subordination, Non-Disturbance, and Attornment Agreements aim to protect the rights and interests of both the lender and the tenant in Tennessee's commercial loan transactions. The lender is granted priority status over the leasehold estate in case of foreclosure, while the tenant is assured of their right to remain in the leased premises and continue their business operations undisturbed, regardless of ownership changes. These agreements provide a measure of security and stability for all parties involved in the commercial loan and lease arrangement.