subordination, nondisturbance and attornment agreements

e. Lender’s Objective—Assurance that tenant will honor assignment ofrentals contained in loan documents.Lender’s Solution—Inclusion of an SNDA provision to that effect.Possible Tenant Objection—Tenant does not want to get caught betweentwo parties each contending it has the right to rent payments. Further,tenant does not want the lender to trigger the assignment of rentals andthen not proceed with foreclosure, because this will cut off landlord’saccess to cash to repair and maintain the leased premises.Possible Negotiated Result—An SNDA provision which provides fordirect payment to lender for an agreed maximum period or a provision thatrent shall be paid into escrow. In any event, the SNDA should contain theagreement of the landlord authorizing the tenant to make the payment asagreed, so the tenant can avoid being caught in the middle.f. Lender’s Objective—Assurance that tenant will not terminate, cancel orsurrender the lease prior to the end of the lease term.Lender’s Solution—An SNDA provision prohibiting termination,cancellation or surrender of the lease without lender consent.Possible Tenant Objection—This prohibition could deny tenant the abilityto exercise remedies for landlord’s default. Further, even in the absence ofdefault, the tenant wants the flexibility of dealing with the landlord, notthe landlord and a loan officer the tenant has never met.Possible Negotiated Result—Tenant agrees to give lender notice oflandlord’s default and an opportunity to cure before exercising remediesunder the lease; or tenant agrees not to exercise the remedy of leasetermination until the lender has been notified and has had an opportunityto cure.g. Lender’s Objective—Avoidance of burdensome lease provisions identifiedduring lender’s due diligence lease review. [Example: indemnificationobligations relating to matters not within the lender’s control, such asenvironmental indemnifications.]Lender’s Solution—Require a lease amendment as a condition to closingthe loan or as a condition to approving the lease; alternatively, inclusion ofan SNDA provision containing contingent lease modifications that areeffective only following foreclosure.D-SNDAs 11-10-07 - 12 -