SNDA (Subordination, Non-Disturbance and Attornment)

SNDA: What the Market Actually Requires

The whole agreement exists because lien priority cuts both ways. If a lease was signed before the mortgage recorded, it is senior: foreclosure does not touch it, which protects the tenant but also means the lender inherits whatever the lease says, including below-market rent or generous purchase options. If the lease came after the mortgage, it is junior and foreclosure can extinguish it, which protects the lender's flexibility but leaves the tenant exposed. The SNDA is the negotiated middle: the lender gets a uniformly subordinated, attorning rent roll, and the tenant gets a contractual promise that paying rent and performing keeps it in possession no matter who owns the building.

In practice, the fight is over the non-disturbance details. Strong credit and anchor tenants will not sign a subordination without robust non-disturbance protection, and their lease forms often condition subordination on the lender delivering an acceptable SNDA. The recurring negotiation points are whether the successor landlord must honor tenant improvement allowances and offset rights, who keeps casualty and condemnation proceeds, and whether the lender is bound by rent paid more than one month in advance or by lease amendments it never approved.

Lender flexibility varies. Banks and life insurance companies will usually negotiate SNDA terms within reason at origination. CMBS is more rigid: the loan documents specify approved forms, and after securitization any new or amended SNDA goes through a servicer process that is slow and unsympathetic, so tenants signing leases at CMBS-financed properties should negotiate the SNDA at lease signing, not later. On single-tenant net lease deals, the SNDA is effectively a closing requirement, since the entire collateral value sits in one lease surviving foreclosure.

Why It Matters for Your Loan

For a borrower, SNDAs are a closing checklist item that can stall funding if anchor tenants negotiate slowly, and a leasing issue for the life of the loan, since major tenants will demand them and your loan documents dictate the form. For the lender, they are what makes the rent roll durable collateral. Deals with credit or anchor tenants, and any single-tenant net lease financing, should have SNDA forms agreed early; a good debt broker flags required SNDAs and estoppels at term sheet stage so third-party paper does not become the reason a closing slips.