July 20th, 2011, By

5 Dangerous Lease Clauses- Part Four

In a typical lease negotiation, the parties, the attorneys and the brokers focus only on the key financial aspects within the lease document.  However, there are subtle and seemingly innocuous clauses that can cost the tenant a pretty penny long after the lease has been signed.  Here’s a quick list of 5 Dangerous Lease Clauses:

  1. Usage Clause
  2. Sublease Clause
  3. Holdover Clause
  4. Subordination and Non-disturbance Agreement (SNDA)
  5. Repairs and Maintenance

4.  SUBORDINATION AND NON-DISTURBANCE AGREEMENT (SNDA)

The SNDA protects you in the event that your landlord loses their building in a foreclosure. Basically, it stipulates that as long as you are current and continue to pay your rent, the mortgagee agrees that notwithstanding the foreclosure, your lease will prevail.  In times of severe recession, like right now, this is a prudent and necessary insurance policy for the tenant.

This is the one clause within the lease that a third party, the mortgagee, has to become involved and provide you a Subordination and Non-disturbance Agreement.

Any majority or AAA credit tenant should make this one of their KEY lease checklist items!