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The SNDA - Friend or Foe?

Enter your text The cell site leasing process cuts across many areas of the law: contracts, easements, insurance, city/county government and property title. One of the least understood aspect of cell site leasing is the subordination, non-disturbance and attornment agreement (SNDA). The SNDA is an agreement between a property owner, tenant and a lender to address the nautre of the relationship among them. Property owner landlords and lenders want the tenant's rights to be subordinate (i.e. lesser in priority) to the mortgage. Ccell site lease tenants want to make sure that the mortgage lender will not disturb their leasehold in the event of foreclosure. The attornment provides that the tenant will continue their obligations under the contract in the event that a new landlord takes over the lease upon foreclosure. It assures a lender that the tenant will attorn (i.e. turn) to the lender following a foreclosure.

In lease scenarios, an SNDA normally presents few challenges. Attorneys for lenders may review the SNDA and make some edits to the agreement but it is usually approved. Lenders generlly like the new revenue stream and see minimal risk resulting from the cell site on teh borrower's property. The SNDA takes on a different role when the landlord is selling the lease. In this case, the lender's attorneys are much more likely to scrutinize the SNDA while considering factors such as the borrower's loan terms and the nature and scope of the lease sale. Some lenders refuse to sign SNDAs while other require a commitment from the borrower to use the sale funds toward the loan balance.

The SNDA can be a friend or foe depending on the circumstances. Cell site landlords should be aware that and SNDA will come up as an issue any time there is a mortgage or other lenders showing up on a title report. Being prepared to address the SNDA will avoid surprises and help get to the finish line efficiently.

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Tuesday, 13 November 2018

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