Non-Disturbance and Attornment Agreements (with
Kathryn Cochrane Murphy
Kathryn Cochrane Murphy is a senior partner at the Boston firm of Palmer & Dodge, LLP. She is a member of the
American College of Real Estate Lawyers, the Real Estate Finance Association, the Urban Land Institute, and Lambda Alpha
International, the honorary Land Economics Society. She is a also a member of the Brookline Housing Advisory Board and
an officer and director of the Emerald Necklace Conservancy. The author thanks Cara J. Nelson who provided research and
Estoppel certificates and subordination,
non-disturbance and attornment agreements are
often the subject of intense negotiation, and for good reason.
IN RECENT YEARS, COMMERCIAL TENANTS have become more assertive and lenders have
established stricter requirements; therefore, negotiations over tenant estoppel certificates and
subordination, non-disturbance and attornment agreements (“SNDAs”) have become more intense. More
often, tenants are large, national chains with large legal departments with more leverage and a model or
form for their estoppel certificates and SNDAs. Also, it has become common to deal with out-of-state
lenders who are less familiar with the local landlord’s needs and the local market. Additionally, since the
recession of the early 1990s, publicly financed transactions have become more popular and are subject to
greater scrutiny and more rigorous underwriting requirements. Finally, the “battle of the egos” or “battle
of the bureaucracy” often takes over and causes more difficult negotiations regarding these once simple
documents. Counseling the Landlord on Tenant Estoppels and SNDAs, 16 The Practical Real Estate
Lawyer 15, 16 (2000).
ESTOPPEL CERTIFICATES • An estoppel certificate is ordinarily a simple form requesting
information regarding the lease term, amount of rent, and the amount of the security deposit. It also asks
the tenant to confirm that the lease is still in effect and that neither the tenant nor the landlord is in
default under the lease. Often, as a condition to closing the loan, the landlord’s or purchaser’s lender
requires a certain percentage of tenants to deliver their estoppel certificates in the form that the lender
provides. Sometimes a form is agreed to in advance with a lender and made a part of the purchase and
sale agreement or part of the lease form.
It is the landlord’s responsibility to ensure that the lender receives the requested estoppel certificates.
Typically, the landlord will require a provision in its lease that the tenant will deliver an estoppel
certificate upon landlord’s request. For example:
“Tenant shall deliver to Landlord upon ten (10) days’ notice by Landlord an estoppel certificate stating
the commencement date and expiration date of the Lease, current rent, any amendments or modifications
to the Lease, whether either Landlord or Tenant is in default, the date of the last rent paid, amount of any
security deposit paid and any other statements Landlord reasonably requests.” Id.
The landlord ordinarily requests that the tenant execute the estoppel certificate as quickly as possible
to speed up the loan or sale transaction. Therefore, to induce the tenant to execute the form, there are
several things that landlords and lenders should keep in mind when drafting estoppel certificates:
• Keep the form short.
• List all lease documents in detail and include all lease documents in the definition of “lease”;
therefore, all of tenant’s confirmatory statements relate to ALL lease documents.
• Estoppel certificate should look like a “true/
false” test with any blank spaces to be completed as “none.”
• Use “to the best of tenant’s knowledge” in place of any absolute statements where it makes sense.
• Don’t insist that tenant certify a legal conclusion, i.e., that the lease is non-recourse to the landlord.
The landlord must be prepared to discuss any tenant objections to any of the requested certifications
with the tenant and to explain the certificate’s provisions. The landlord should have alternative language
or knowledge qualifiers available to deal with any potential objections. The landlord should keep the
lender’s counsel fully apprised of its efforts in getting the certificate executed. However, some issues the
buyer or lender should not be willing to make sacrifices on include the following:
• The landlord should not allow the tenant to cross out entire sections of the certificate and insert “as
stated in lease.” It is important that the landlord learn directly from the tenant how the tenant views these
• If the tenant’s certifications are different from provisions in the lease, it is important for the landlord
and the tenant to come to agreement as to which provision controls. The landlord must then advise the
buyer’s and/or lender’s counsel of the agreement and, if possible, the agreement should be in writing.
• The landlord should not allow the tenant to assert a lack of knowledge on whether it is the subject of
a bankruptcy, insolvency, or involuntary procedure. The tenant should be held to know of its affairs with
its creditors and should certify that it is not the subject of any such proceedings.
• If the tenant refuses to deliver a tenant estoppel certificate, the landlord can suggest to the buyer or
lender that the landlord deliver an estoppel certificate for that particular tenant. See id. at 17.
The estoppel certificate provides a buyer or lender with a basis for asserting equitable estoppel
against a tenant who disputes a lease provision. However, not every court has enforced an estoppel
certificate against a tenant. For example, in Katz v. M.M.B. Co., 1986 Ohio App. LEXIS 6734 (Ohio Ct.
App. 1986), the court held that although the tenant executed an estoppel certificate certifying that it had
no knowledge of any claim against the landlord when, in fact, it was aware of some maintenance issues,
the tenant did not know the extent of the problem and therefore should not be bound by the statements in
To enable the requesting party to invoke equitable estoppel, the estoppel certificate should include the
• A recitation of the reasons why the requesting party needs the certificate.
• A statement that the requesting party will rely on the tenant’s statements in the certificate.
• A statement that the executing party is aware that the requesting party will rely on the certificate and
intends the requesting party to so rely. Current Leasing Law & Techniques–Forms §3D.35 (Matthew
Bender & Company, Inc. 2002).
In addition to the above, the following are general suggestions for estoppel certificates:
• Carefully identify the lease.
• Include a certified copy of the lease.
• Refer to specific commencement dates.
• Refer to specific security deposit amounts.
• The tenant should only be asked to give information that is limited to the scope of the lease and not
general information about the tenant’s proprietary business.
• The landlord should be required to provide the same sort of certificate as the tenant.
• The landlord should agree to keep all information confidential and provide such information only to a
limited class of users (lenders and purchasers). See id.
Finally, the tenant should be aware that the landlord may attempt to bury something in the certificate,
such as waivers and representations that go beyond the information given under the lease. See id.
For a sample estoppel certificate, see Appendix A.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS • In making a
loan secured by real property, lenders examine the value of the land and also any existing leases of the
property. The lender’s goal is to ensure that any favorable leases will continue to encumber the property,
but to retain the freedom to terminate a below-market or other problem lease in case of foreclosure of the
property. At the same time, the tenant’s goal is to ensure that its lease remains intact throughout the
entire term and that the landlord’s obligations will be performed, even if a new landlord comes into the
picture. Often, the lender’s situation is resolved by an automatic subordination provision in the tenant’s
lease. However, it is important for the tenant to secure its position throughout its term; therefore, the
tenant should negotiate a non-disturbance agreement as well.
The typical SNDA is an agreement between a lender and a tenant by which the tenant acknowledges
that the lease is subordinate to the landlord’s mortgage, and as long as the tenant is not in default under
its lease, the tenant will not be disturbed if the landlord defaults under the mortgage. If the landlord does
default under the mortgage and there is an SNDA in place, the mortgagee cannot name the tenant as a
defendant in the landlord’s foreclosure. Therefore, as long as the tenant is not in default under the lease,
the lease is treated as senior and will not be terminated in a foreclosure. However, if the tenant is in
default, the lease will be subordinated to the mortgage and can be terminated. 1-3 Collier Real Estate
Trans & Bankruptcy Code ¶3.07 (Matthew Bender & Company Inc. 2002). If the tenant is a party to an
SNDA and becomes a debtor in bankruptcy, the lease remains in effect during the automatic stay unless
the tenant takes action otherwise, and the SNDA remains in effect with the foreclosure being subject to
Although very few states have statutes relating to SNDAs, some states have specific guidelines. For
example, in California, the SNDA must contain specific size fonts. 7 Current Leasing Law &
Techniques–Forms §7C.03 (Matthew Bender & Company, Inc. 2002). Therefore, the drafter of an
SNDA should consult local law to determine if any specific statutes or regulations apply.
Landlord’s Subordination Provision
Typically, the landlord will put a provision in its form lease reflecting the agreement. For example, a
landlord-friendly provision may include the following:
“Unless a Mortgagee (as hereinafter defined) shall otherwise elect as provided in Section ___, Tenant’s
rights under this Lease are and shall remain subject and subordinate to the operation and effect of any
lease of land only or of land and buildings in a sale leaseback or lease sublease back transaction
involving the Premises or Landlord’s interest therein, or any mortgage, deed of trust or other security
instrument constituting a lien upon the Premises or Landlord’s interest therein, whether the same shall be
in existence at the date hereof or created hereafter, any such lease, mortgage, deed of trust or other
security instrument being referred to herein as a “Mortgage,” and the party or parties having the benefit
of the same, whether as lessor, mortgagee, trustee or noteholder, being referred to therein as a
“Mortgagee.” Tenant’s acknowledgment and agreement of subordination provided for in this Section are
self-operative and no further instrument of subordination shall be required; however, Tenant shall
execute such further assurances thereof as shall be requisite or as may be requested from time to time by
Landlord or any Mortgagee.”
Mortgagee’s Subordination Provision
A mortgagee’s unilateral subordination provision may include the following:
“If a Mortgagee shall so elect by notice to Tenant or by the recording of a unilateral declaration of
subordination, this Lease and Tenant’s rights under this Lease shall be superior and prior in right to the
Mortgage of which such Mortgagee has the benefit, with the same force and effect as if this Lease had
been executed, delivered and recorded prior to the execution, delivery and recording of such Mortgage,
subject, nevertheless, to such conditions as may be set forth in any such notice or declaration.”
An attornment provision may include the following:
“If any person shall succeed to all or part of Landlord’s interest in the Premises, whether by purchase,
foreclosure, deed in lieu of foreclosure, power of sale, termination of lease or otherwise and if so
requested or required by such successor in interest, Tenant shall attorn to such successor in interest and
shall execute such agreement in confirmation of such attornment as such successor in interest shall
However, a tenant-friendly provision can be vastly different. For example:
“A. Upon written request of Landlord, or any mortgagee or beneficiary of Landlord, Tenant will, in
writing, subordinate its right under this Lease to the interest of any ground lessor of the land upon which