Glossary

Subordination, Non-Disturbance, and Attornment Agreement (SNDA)

Also known as: SNDA, SNDA

A tripartite agreement among landlord, tenant, and lender that subordinates the tenant's lease to the lender's mortgage while assuring the tenant that its possession will not be disturbed after a foreclosure, in exchange for the tenant's agreement to attorn to (recognize as landlord) the foreclosing lender or purchaser.

The SNDA solves a structural problem created by lien priority: without it, a lease signed after a mortgage was recorded would ordinarily be extinguished if the lender forecloses, since the lease is junior to the mortgage. The subordination clause makes the lease junior to the loan (protecting the lender's ability to deliver clean title on foreclosure), the non-disturbance clause protects the tenant by obligating the lender or any foreclosure-sale purchaser to honor the lease so long as the tenant is not in default, and the attornment clause requires the tenant to recognize the new owner as landlord going forward. Lenders typically require SNDAs from all major tenants as a closing condition on both acquisition loans and construction loans with pre-leasing, since an unprotected tenant walking away after a foreclosure (or a tenant asserting priority over the lender's lien) can materially impair collateral value.