When two companies enter into a partnership, it is essential that they establish clear guidelines for the use and protection of their respective intellectual property. This is where an SNDA agreement comes into play.
SNDA stands for Subordination, Non-Disturbance, and Attornment agreement. It is a legal contract among three parties: the landlord, tenant, and a third-party lender or buyer. The purpose of this agreement is to protect the interests of each party in the event of a default or foreclosure.
Let`s break down each of the three components of an SNDA agreement:
Subordination: This part of the SNDA agreement says that the tenant`s rights are subordinate to the lender`s or buyer`s rights. In other words, if the landlord defaults on the loan or mortgage, the lender or buyer has priority over the tenant`s rights. The tenant can`t make any claims against the lender or buyer for any claims against the landlord.
Non-Disturbance: This component of the agreement ensures that the tenant`s lease will not be terminated in the event of a default or foreclosure. If the landlord defaults on the loan or mortgage, the tenant has the right to remain in the leased space and continue to pay rent to the new owner or lender.
Attornment: This is the final component of the SNDA agreement and means that the tenant agrees to acknowledge and accept the new owner or lender as the new landlord in the event of a default or foreclosure. This is important because it gives the new owner or lender the right to collect rent from the tenant and enforce the lease agreement under the terms of the original lease.
In summary, an SNDA agreement is a legal contract that protects the rights of all parties involved in a commercial real estate transaction. It establishes clear guidelines for subordination, non-disturbance, and attornment, ensuring that each party`s interests are protected in the event of a default or foreclosure. If you`re considering entering into a commercial lease, make sure to consult an experienced real estate attorney to ensure that you fully understand the terms of the SNDA agreement.