Subordination, Attornment and Non-Disturbance Agreement (SANTA) is a legal document that is used to protect the rights of a tenant in a commercial real estate lease. It is designed to ensure that the tenant’s interest in the property is not disturbed or challenged by a third party, such as a lender who has taken a security interest in the property. The SAND Atypically includes three key provisions: subordination, attornment and non-disturbance. Subordination is a provision that states that the tenant's leasehold interest is subordinate to the rights of any person or entity who has a higher priority interest in the property, such as a mortgagee or a lien holder. This means that if the lender forecloses on the property, the tenant’s leasehold interest will be extinguished. Attornment is a provision that states that the tenant agrees to “attorn” to the lender in the event of a foreclosure. This means that the tenant agrees to become the tenant of the lender in the event of a foreclosure. Non-disturbance is a provision that states that the tenant’s rights to the property will remain in place so long as the tenant is in compliance with all terms of the lease. This means that the tenant’s rights will not be affected by any foreclosure proceedings, and the tenant will not be evicted from the property unless they breach the terms of the lease. There are two main types of SANTA: a Single-Lender SANTA and a Multi-Lender SANTA. A Single-Lender SANTA is typically used when a tenant is leasing a property from a single landlord. A Multi-Lender SANTA is used when a tenant is leasing a property from multiple landlords.
Subordination, Attornment And Non-Disturbance Agreement
Description Define Attornment
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FAQ
One of the closing documents in a real estate financing transaction involving leased property is a subordination, non-disturbance and attornment agreement (SNDA). SNDAs have a number of purposes. They serve to connect the lender with the tenant and they provide other uses as well.
An estoppel certificate establishes the current status of the lease terms for a third party. Generally, the certificate requests that the Tenant verify that the rent is current or whether the Tenant has any potential claims against the Landlord.
What is an SNDA? A subordination, non-disturbance, and attornment clause outlines the rights of the tenant, landlord, and third parties with an interested in the property. Potential third parties included in an SNDA include a lender funding the building or a party buying the property.
For example, someone selling a piece of real estate at a high price may know nonpublic facts that will decrease the value of the property. By intentionally failing to disclose that information to a prospective buyer, the seller can earn a larger amount from the sale.
An estoppel agreement (also known as an estoppel certificate) is a legal document that's used to verify certain representations made by the landlord.
A tenant estoppel confirms in writing that a lease exists and outlines the conditions and terms of that lease. SNDA stands for Subordination, Non-Disturbance and Attornment Agreement. This is an agreement between a tenant and a lender that spells out important rights for each party.
Subordination is putting something in a lower position or rank. Therefore, a subordination agreement puts the lease below the mortgage loan in priority. Mortgage lenders want the leases to be subordinate to the mortgage. That way, the mortgage loan is paid first if there is a foreclosure.
A nondisturbance clause is a provision in a mortgage contract that ensures that a rental agreement between the tenant and the landlord will continue under any circumstances. This is done primarily to protect the renter from eviction by the mortgagor if the property is foreclosed upon by the lender.