subordination, nondisturbance and attornment agreements

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3. Notices/Landlord Defaults/Self-Help:Must comply with the laws of the state where the project is located based on review bylocal counsel.YES NO SNDA (a) Tenant must send notice to lender concurrent with the notice sentto landlord.YES NO SNDA (b) Lender should have the same amount of time in order to cure thedefault as is given to the landlord plus the amount of time it takesfor lender to become entitled under the mortgage to remedy thedefault, but at least some minimum finite period of time (e.g., thelonger of the time given the landlord or 30 days).Discussion: As a practical matter, if the loan is performing, it is unlikely thelender will undertake cure of a landlord default, but the lender willwant to be aware of the situation and be in a position to insist thatthe landlord take action.YES NO SNDA (c) General tenant rights to terminate a lease upon any type of landlorddefault must be avoided. Tenant remedies in many states arelimited by common law to landlord defaults which result in"constructive eviction" of the tenant (something the tenant has toprove in court).YES NO SNDA (d) Setoff Rights and Self-Help:(1) Broad rights of setoff must be avoided except for monetarydefaults by landlord; setoff rights must never be allowedagainst a purchaser at foreclosure which arise from priorownership.(2) Tenant should agree to perform any work under any selfhelpclause in a "good and workmanlike manner" and mustindemnify landlord for any liability resulting from tenant'sactions.(3) Tenant's self-help rights must exclude 1) buildings or spaceother than the "premises;" 2) systems or their operations(HVAC, roof, elevators, plumbing, etc.) which are notexclusively related to the “premises”; or, 3) actionsaffecting any other tenant in the project.(4) Landlord cannot be liable for services failures beyondlandlord's control; however, rent may be abated and tenantcan be allowed to terminate a lease due to a services failurewhich continues beyond some finite period of time.4. Other Provisions:(a) Assignment and Subletting:YES NO SNDA (1) Original tenant must always remain obligated forperformance of all obligations under the lease.YES NO SNDA (2) The use of the premises by any assignee or sublesseeshould tie back to the use clause in the lease (i.e. asublessee restricted to the same use as the original tenant).Use of the premises by any tenant must be restricted so thatit (i) does not conflict with any "exclusive use" orD-SNDAs 11-10-07 - 18 -
"prohibited use" in any lease in the project (all leasesshould prohibit certain bingo parlors, strip joint, etc...); orii) have the potential to result in ill effects to other tenantsin the project (e.g., increasing elevator or traffic loads, etc.)YES NO SNDA (3) Landlord should be able to qualify the assignee/sublessee asto creditworthiness, character, nature of business, etc.YES NO SNDA (b) Cotenancy: [i.e., a clause in which a tenant’s obligations under thelease are dependent upon the continuation of one or more othertenants in the project]. These are very common in anchoredshopping centers.(1) Cotenancy clauses should be avoided if at all possible.(2) Such clauses are standard in regional mall anchor leases.Discussion: Often the traffic anticipated to be generated by an anchor tenantwill be the key reason why a developer will be able to successfullylure other retailers into a new center. The co-tenancy clause is thetenant’s means of placing onto the developer the risk that the actualleasing may not match the promises made by the developer.Certainly, the retailer counting on traffic from an anchor does notget the benefit of his bargain if, instead of being next door to aretailer generating hundreds of customer trips a day, the retailer isnext door to an empty, boarded up space. If cotenancy rights aregranted to a tenant, then the cotenancy right should match a similaroperating covenant of the anchor tenant. Retailers are as reluctantto give covenants to operate as landlords are reluctant to givecotenancy clauses.YES NO SNDA (c) Right-to-Go Dark Clauses: (i.e., a clause permitting the tenant tovacate the premises without termination of the lease).- Landlord must be able to regain control of the space afterDiscussion:some finite period of time (ideally as short as possible).While most lease forms provide that “abandonment” or vacation ofthe premises is a default under the lease, “going dark” in an officeproject is generally less harmful to the landlord than in the case ofa retail center. Boarded up or dark windows in a retail center,regardless of the payment of rent by the tenant, may cast a blightupon the vacant space that is likely to affect the neighboringtenants.YES NO SNDA (d) Force Majeure:- Except for rental payments, all leases must allow thelandlord additional time for performance of obligationsunder the lease after occurrence of force majeure events.Discussion:Force Majeure should not be a sticking point in lease negotiations.Often the issue of reciprocal force majeure provisions arises. Besure the force majeure clause does not apply to monetaryobligations.D-SNDAs 11-10-07 - 19 -
Page 1 and 2: Presented:DBA REAL PROPERTY SECTION
Page 3 and 4: SUBORDINATION, NONDISTURBANCE AND A
Page 5 and 6: a. The lease was superior to the mo
Page 7 and 8: defaulted under the lease, and NCNB
Page 9 and 10: the Fleetwood note to be in default
Page 11 and 12: Between Lessee and Lender--Subordin
Page 13 and 14: Possible Tenant Objection—If tena
Page 15 and 16: Possible Tenant Objection—Tenant
Page 17 and 18: to apply the proceeds against the l
Page 19: Discussion: Even though the lender
Page 23 and 24: - The lender must make sure it will
Page 25 and 26: entering into the Deed of Trust and
Page 27 and 28: (b) Bank gives Tenant notice that t
Page 29 and 30: To Tenant:16. Arbitration. Any cont
Page 31 and 32: ACKNOWLEDGMENTSTHE STATE OF TEXAS
Page 33 and 34: (b) Lessee's leasehold estate under
Page 35: EXECUTED on the dates of the acknow

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