A rental agreement can help protect a tenant`s interests so that in the event of a transfer of ownership to the property, he can continue to pay the rent and accept the new owner as the new owner. If you are a landlord, you can assure potential tenants, using a rental agreement, that they can stay in the property for the duration of their lease, in order to limit fears about signing a lease with you. Other names for this document: Non Disturbance Agreement While most commercial leases contain an obligation that the tenant execute a “subordination, non-interference and attornment agreement”, it is generally referred to as an “SNDA”, a majority of tenants who have signed such leases, and most likely several real estate agents representing these tenants, it would be difficult to explain the importance of a NOS. and why they are needed by both commercial lenders and tenants. Click “Continue reading” below. When a property is leased, it is customary for the tenant to deposit a certain amount of money to obtain improvements or to defer to the property until the tenancy period expires. If the owner of the property is late with the mortgage, the tenant can expect significant inconvenience, if only the actual loss. The above scenario illustrates what can happen when a lease is subject to a mortgage. The lender may distribute the tenant even if the tenant has complied with its contractual obligations.
To avoid this situation, a tenant`s best solution is, if possible, the signing of an agreement with the lender in which the lease takes precedence over the mortgage. Keeping It Real. The credit climate can have an impact on what the rental agreement requires of the landlord, even for a large tenant. What does your lease say subordination? What will the lease say if you negotiate a new lease? What provisions should tenants and lenders look for in an SNDA? Future articles in Keeping It Real will address some of these issues.