Reviewed by Aug 27, 2020| Updated on
What is an Attornment?
Attornment happens when a homeowner considers a new property owner as their landlord. In the case of hands-changing commercial properties, an attorney clause in a Subordination, Non-disturbance, and Attorney Arrangement (SNDA) allow the occupant to accept a new owner as their landlord and continue to pay rent irrespective of whether the properties change hands in a regular sale or a foreclosure.
An attorney is most often associated with real estate rules and is meant to understand the relationship between the parties in a transaction. For example, if a tenant rents an apartment only to have the owner alter during the contract, an attornment can occur.
The clause in an SNDA states that if ownership changes the new owner must replace the former owner in the lease and assume all the rights and obligations of the previous owner. The provision also allows for tenants to continue paying rent irrespective of who owns the house.
Attornment in Commercial Leases
Commercial leases are also the topic of an SNDA. It is a tenant-landlord agreement that outlines the tenant and landlord's specific rights. Also, the SNDA can include details about other third parties, such as the landlord's lender or the property's buyer.
There are three components: the subordination clause, the non-disturbance clause, and the procuration clause. Attornment is equivalent in a commercial contract.
The attorney clause in an SNDA obliges the tenant to recognize the property's new owner as its landlord irrespective of whether the original owner purchased the property from a standard sale or a foreclosure. The provision also demands that the occupant continue to pay rent to the new landlord for the remainder of the lease period.
In an SNDA subordination clause, the borrower agrees to allow their interest in the property to become subordinate to a third party lender's interests.