Understanding SNDA’s

Last Updated on Friday, 11 May 2018 12:07 Written by Chris Griswold Friday, 11 May 2018 12:07

SNDA’s (Subordination, Non-Disturbance and Attornment Agreements).  What are they?  What do they do?  Who needs them?  When?  Good stuff.  See more below (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

Understanding SNDA’s

Question #1:  So what is an SNDA?

Answer:  It’s an agreement entered into by and between the tenant and landlord’s lender that basically allows the tenant to remain operating in their leased premises should their landlord become insolvent.  In return for the lender’s agreement not to disturb the tenant’s operations, the tenant agrees to “attorn” to the lender as its new landlord.  Lastly, the tenant agrees to subordinate (i.e., subject) their leasehold estate interest to the lender’s security interest in the leased premises thus making the lender’s securitization in the leased premises superior to tenant’s leasehold interest in the leased premises.

Question #2:  So what is the main benefit of having an SNDA in place for a commercial tenant?

Answer:  It will ensure that the commercial tenant’s business operations won’t be negatively affected by a landlord’s financial distress.

Question #3:  Do SNDA’s change the nature of the new landlord/tenant relationship existing between tenant and lender?

Answer:  Probably so.  SNDA’s usually have certain “carveouts” in place which will either diminish the obligations and/or enhance the rights of the lender under this new landlord/tenant relationship – depending upon the relative bargaining power of the parties.  For example, if the lender is in a stronger bargaining position than the tenant, the lender (as the new LL) will have additional time (on top of that granted to the original landlord under the lease) to cure certain defaults of the original landlord.  Furthermore, if the lender has the stronger bargaining position, the SNDA will usually contain language that lender will not be responsible for certain defaults of the original landlord which occurred during the original landlord’s march towards bankruptcy.  The document may also limit the repairs and maintenance that lender is required to perform (as compared to the repairs and maintenance that the original landlord had to perform under the lease).  The document could also attempt to diminish the lender’s liability to tenant as relating to property casualties and personal injuries which occur on the demised premises or the shopping center.  Accordingly, it’s always a good idea to consult counsel prior to entering into a subordination agreement.

Question #4:  When should a commercial tenant think about entering into the SNDA agreement with the landlord’s lender?

Answer:  Remember, an SNDA is only useful if it is entered into prior to your landlord’s insolvency – you can’t enter into one after landlord’s insolvency and back date its effectiveness to an earlier point in time.  Accordingly, the SNDA issue is one to address, if at all possible, up front during the negotiations which precede the execution of the lease.  Otherwise, the sooner the better….

What My Clients Are Saying

 “Chris Griswold is a good business attorney whom I’ve used often and much through the years, for both my business and personal needs, and whom I’d gladly refer to anyone.  He’s creative, prompt, eager to help and very competent.  He’s good at what he does, he has fun doing it, and it shows up in his work through his good problem solving skills.  I look forward to a continued relationship with Chris.”
Edward F. Wells / President, Wells Nelson & Associates / Oklahoma City, Oklahoma

Learn More

To Record Or Not To Record

Last Updated on Thursday, 3 August 2017 01:59 Written by Chris Griswold Thursday, 3 August 2017 01:59

Listen up landlords and tenants.  There is a rhyme and a reason to recording (and not recording) leases in the land records of whatever relevant county.  This should be helpful for everyone… (and don’t forget to click on my Facebook or YouTube links below to also see my short video on this material).

To Record Or Not To Record

A question that comes up over and over again in my practice (from clients and opposing attorneys alike) is whether a lease document should be recorded in the relevant county’s real property records office (usually, the County Clerk’s Office).  Specifically, people ask “what difference does it make whether the lease document is recorded?”  Well, to answer this question, we must ask a couple more questions.

First, does the lease document contain sensitive information that you’d rather not be within the public domain?  Remember, if the lease document is recorded in the public records, the lease document and all the information within it will become public information.  So, for example, if the amount of rent you’re paying is set forth within the lease (and it usually always is stated within the four corners of the lease document) and you don’t want other industry competitors knowing how much you’re currently paying, or, more importantly, how much you will be paying in the future, then you might not want to record that lease.  Other factors to consider in arriving at whether you should or shouldn’t record would, among other things, be: i) any exclusive use provisions, ii) any required co-tenancy provisions, iii) any required minimum insurance policy limits, etc… which are expressly set forth within the lease.  Remember, if you don’t want someone else to know about all the terms of the deal that you’ve struck, then you probably don’t want to record the lease.

Second, is there another way (besides recording the actual lease document itself) to put the general public on notice as regarding the existence of the lease document?  Yes.  Parties to a lease usually agree to record what is called a “Memorandum of Lease” instead of the actual lease itself.  Why?  The Memorandum of Lease is a much shorter abstract of the lease document (usually only 1 or 2 pages) which still acts to put the public on notice as regarding the existence of the lease but doesn’t contain all of the sensitive information as set forth hereinabove.  So, with a Memorandum of Lease, you can still get the benefits that come with recording the lease document while retaining custody of the sensitive information contained within the lease document that you spent so much time negotiating over.

Accordingly, prior to recording any lease document, be sure to think through the questions set forth above.  More often than not, you’re better off not recording.

What My Clients Are Saying

Chris Griswold has always been proactive and professional.  He takes the time to work with us and tailors his approach to our situational needs.  My favorite thing about Chris is that he will let me know if there is an easier, less-expensive approach.  We look forward to working with him well into the future.”
Carl S. Milam / President / Western Concepts Restaurant Group / Oklahoma City, Oklahoma

Learn More

Lot Lines: Disaster lessons for property owners

Last Updated on Thursday, 6 October 2016 02:05 Written by Chris Griswold Monday, 20 June 2016 02:49

Courtesy the Journal Record
by Ted Streuli

There were two tragic incidents in Orlando, Florida, this week: the mass shooting at a nightclub that left 50 people dead and a 2-year-old killed by an alligator on Disney property.

I asked Oklahoma City attorney Chris Griswold what commercial property owners and managers can do to limit their liability in such extraordinary circumstances.

The property owner might not have liability in the nightclub shooting, but it’s something an owner would like to prevent. Oklahoma allows licensees to carry firearms, but Griswold said that can be prohibited by a commercial landlord. The owner or his agent must post a sign saying guns are not allowed on the property, and it then applies to any part of the privately owned building that’s open to the public. That means if it’s posted, no one except law enforcement officers can carry a gun into reception areas, elevators, hallways, dining spaces or other public places.

There are exceptions, Griswold explained. Landlords can’t prohibit gun owners from locking their weapons in their cars parked on the property, and they can’t prohibit a tenant whose office is not open to the public from carrying a gun if he can enter without passing through a public space.

For multifamily housing, there would have to be a stipulation in the lease.

Carrying a gun into a privately owned building that prohibits firearms is not a criminal act. The landlord may order the person off the premises; if he doesn’t comply and the police are called, he can be fined $250. The penalty isn’t stiff, but landlords and their property managers who have posted the appropriate sign have the right to remove people who are armed.

As for the alligator incident, Disney’s lawyers have likely been hunkered down, frantically looking for a way to minimize the company’s liability. As Griswold noted, the whole point of Disney is to entertain families with children, and the company has a responsibility to do so in a safe manner.

The family assumed no risk of a gator attack, and they may argue that no reasonable person would expect an alligator to come after a child on theme park property. Disney could have marked the dangerous area or hired a company to remove the alligators. At the very least, they could have posted warning signs.

Having warned the public that a danger exists, said Griswold, can help mitigate the liability when something goes wrong.

Read more: http://journalrecord.com/2016/06/16/lot-lines-disaster-lessons-for-property-owners-opinion/#ixzz4C8CEU1Ob

Learn More

CONTACT US
7301 Broadway Extension, Suite 200
Oklahoma City, OK 73116
405.229.7595 (cell)
405.840.1019 (office)
405.843.9190 (fax)

chris@chrisgriswoldpc.com

A signed retainer agreement shall precede any attorney/client relationship.
We accept VISA, Mastercard and now Discover too.


"Getting Your Deal Done"


Designed by WebmasterArmy.com