Tenants should press for a Subordination and Non-Disturbance Agreement (SNDA) when negotiating their commercial lease, especially in today’s economic climate where foreclosures are more common.

Real estate ownership carries with it a complex set of rights, which are typically broken up among different parties.  A lease grants certain rights to the tenant, while a loan grants other rights to the lender.

Most commercial leases contain a subordination clause, in which the tenant agrees that his rights under the lease are lesser than (or subordinate to) the rights of a lender under its loan.  Subordination is a reasonable and common practice, expected of all tenants.

If a lender forecloses on a property, that lender can terminate a tenant’s lease and his ability to remain in the space if the tenant is in a subordinate position to the lender.  For the tenant’s protection, the tenant needs the lender to execute a non-disturbance agreement.  Such an agreement states that, if the tenant is not in default of his lease, then the lender will not terminate the lease in the event of a foreclosure.

At Golden Group Real Estate, we specialize in tenant representation real estate services for office space users in the Chicago area, helping local business owners find office space and negotiate lease and purchase agreements. We never represent landlords, so we are prepared to negotiate aggressively on behalf of our tenant clients.

For more on Golden Group Real Estate, read about our real estate services. Let us know if we can help you find office space for rent or buildings for sale. Call us at (630) 805-2463, email us at troy@goldengroupcre.com, or enter your office space search criteria below.

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