A subordination, non-disturbance and attornment agreement (SNDA agreement) is employed by a landlord, tenant and the lender to resolve how and when the rights of tenants will be subordinate or senior to the rights of lenders.  Mortgage lenders frequently require major tenants to sign an SNDA agreement to assure that the lender’s mortgage is superior to the tenant’s lease.  The SNDA agreement also assures tenants that, even in the event of landlord default and lender foreclosure on the property, the rights of the tenants to their leased premises will be preserved (“non-disturbed”).

For the sale of leased property, attornment is required.  Attornment is the acknowledgment of a new landlord to the transfer of the unchanged rights of the current tenants from the previous landlord.  The tenants continue to be tenants of the new landlord and occupy the property after its sale without creation of any new rights for the new landlord.

Privity of contract creates rights and obligations of contractual parties that entitle them to exercise legal remedy in the event that the other party fails to perform under the contract.  The SNDA agreement prevents the use of assignment to circumvent the privity doctrine by preventing the person who bears the obligation of a lease from becoming liable to a person with whom the contractual relationship did not exist.

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