The Wisconsin Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a legal document that is often associated with commercial real estate loans. It is designed to protect the interests of all parties involved, including the lender, tenant, and the property owner, in the event of default or foreclosure. In Wisconsin, there are two distinct types of SODA agreements: general SODA and subordination SODA. A detailed description of Wisconsin Subordination, Non-Disturbance, and Attornment Agreement starts with understanding each component: Subordination: This refers to the borrower's agreement to subordinate their leasehold interest in the property to the lien of the lender. In the event of foreclosure, the lender's interest takes priority over the tenant's leasehold interest. This provision ensures that the lender has the legal right to sell or lease the property without any interference from the tenant. Non-Disturbance: The non-disturbance clause offers protection to the tenant. It ensures that in the event of default or foreclosure, the tenant's rights under the lease agreement will not be disturbed by the lender or the new property owner. As long as the tenant complies with the terms of the lease, they will be able to continue operating their business undisturbed, even if ownership of the property changes hands. Attornment: This provision requires the tenant to recognize and acknowledge the new property owner as their landlord if a foreclosure occurs. The tenant agrees to accept the new landlord's terms and maintain their obligations under the lease. It provides reassurance to the lender that the tenant will not terminate the lease or refuse to recognize the new owner, ensuring that rental income continues to flow. In Wisconsin, there are variations of the SODA agreement based on the circumstances of the tenant and the property involved. General SODA agreements are typically used for traditional commercial leases, where the tenant is not a major credit tenant or anchor tenant. These agreements provide standard provisions for subordination, non-disturbance, and attornment, safeguarding the tenant's rights while protecting the lender's interests. However, for significant lease transactions involving major credit tenants or anchor tenants, lenders often require a subordination SODA. This specialized agreement includes additional protections for the lender and may involve intricate negotiations between the tenant, landlord, and lender. Subordination Sodas are usually more complex and tailored to fit the specific requirements of the parties involved, ensuring the lender has the necessary safeguards to maximize recovery in case of default or foreclosure. In summary, the Wisconsin Subordination, Non-Disturbance, and Attornment Agreement of a lease aim to establish clear rules and protections for all parties involved in a commercial real estate loan. These agreements come in two forms, general SODA and subordination SODA, depending on the tenant's creditworthiness and the complexity of the lease transaction. Through subordination, non-disturbance, and attornment clauses, the SODA ensures that lenders can foreclose on a property without negatively impacting the tenant's rights, facilitating smooth business operations and maintaining the financial security of all parties.
The Wisconsin Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a legal document that is often associated with commercial real estate loans. It is designed to protect the interests of all parties involved, including the lender, tenant, and the property owner, in the event of default or foreclosure. In Wisconsin, there are two distinct types of SODA agreements: general SODA and subordination SODA. A detailed description of Wisconsin Subordination, Non-Disturbance, and Attornment Agreement starts with understanding each component: Subordination: This refers to the borrower's agreement to subordinate their leasehold interest in the property to the lien of the lender. In the event of foreclosure, the lender's interest takes priority over the tenant's leasehold interest. This provision ensures that the lender has the legal right to sell or lease the property without any interference from the tenant. Non-Disturbance: The non-disturbance clause offers protection to the tenant. It ensures that in the event of default or foreclosure, the tenant's rights under the lease agreement will not be disturbed by the lender or the new property owner. As long as the tenant complies with the terms of the lease, they will be able to continue operating their business undisturbed, even if ownership of the property changes hands. Attornment: This provision requires the tenant to recognize and acknowledge the new property owner as their landlord if a foreclosure occurs. The tenant agrees to accept the new landlord's terms and maintain their obligations under the lease. It provides reassurance to the lender that the tenant will not terminate the lease or refuse to recognize the new owner, ensuring that rental income continues to flow. In Wisconsin, there are variations of the SODA agreement based on the circumstances of the tenant and the property involved. General SODA agreements are typically used for traditional commercial leases, where the tenant is not a major credit tenant or anchor tenant. These agreements provide standard provisions for subordination, non-disturbance, and attornment, safeguarding the tenant's rights while protecting the lender's interests. However, for significant lease transactions involving major credit tenants or anchor tenants, lenders often require a subordination SODA. This specialized agreement includes additional protections for the lender and may involve intricate negotiations between the tenant, landlord, and lender. Subordination Sodas are usually more complex and tailored to fit the specific requirements of the parties involved, ensuring the lender has the necessary safeguards to maximize recovery in case of default or foreclosure. In summary, the Wisconsin Subordination, Non-Disturbance, and Attornment Agreement of a lease aim to establish clear rules and protections for all parties involved in a commercial real estate loan. These agreements come in two forms, general SODA and subordination SODA, depending on the tenant's creditworthiness and the complexity of the lease transaction. Through subordination, non-disturbance, and attornment clauses, the SODA ensures that lenders can foreclose on a property without negatively impacting the tenant's rights, facilitating smooth business operations and maintaining the financial security of all parties.
