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© Practising Law InstituteREAL ESTATE LAW AND PRACTICE

Course Handbook SeriesNumber N-652

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Practising Law Institute1177 Avenue of the Americas

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Commercial Real Estate Financing

2017

Co-ChairsSteven R. Davidson

Joshua Stein Everett S. Ward

© Practising Law Institute

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Leases, Tenants, Estoppels and SNDAs

Ruth A. Schoenmeyer Pircher, Nichols & Meeks

If you find this article helpful, you can learn more about the subject by going to www.pli.edu to view the on demand program or segment for which it was written.

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Negotiating a lease can feel like herding cats. Brokers, operations per-sonnel, risk managers, leasing representatives, property managers, attorneys and, of course, lenders all weigh in with their sometimes conflicting con-cerns regarding a lease. The purpose of this article is to address a lender’s potential concerns regarding a lease, the relative priority of leases and loan documents, and two documents that lenders often require to be executed in connection with a loan: a subordination, non-disturbance and attornment agreement (also known as an “SNDA”) and an estoppel certificate.

A. LENDER APPROVAL RIGHTS

1. How does a lender’s right to approve leases come into play?

a. Encumbered Property. If a property is encumbered by a mortgage or deed of trust, the loan agreement probably requires borrower/ landlord to obtain lender’s approval of certain leases. Borrower’s attorney tries to limit the universe of leases requiring lender’s approval by providing that lender’s approval will not be required unless a tenant leases more than [insert unreasonably high number here] square feet. Lender’s attorney will counter with some param-eters that a lease not requiring lender’s approval must meet, e.g., the lease must be on lender-approved lease form with no material modifications (the parties can argue later about what constitutes a “material” modification), the initial term of the lease must be no longer than a certain number of years, the rent must be market, the tenant must be a bona fide, arm’s-length tenant, the lease must not include a right of termination, etc.

When negotiating a lender’s approval rights, a borrower’s attorney should think carefully about how the approval rights will affect its client when leasing its property. One of my clients recently put financing in place with respect to a property with a relatively low occupancy rate. When we began to negotiate leases, we quickly discovered that the language in the loan agreement (which was negotiated by another law firm) requiring lender to approve any lease with a termination right was problematic. First of all, a land-lord should be entitled to include termination rights in connection with a casualty or condemnation without obtaining lender’s approval. Also, the language in the loan agreement should have specified that it was only a tenant right of termination that would require lender’s approval. We were able to persuade lender to

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agree that it did not need to approve landlord termination rights, but a more literal lender may well have required its borrower to seek approval of all termination rights, and such an outcome would have been both costly (many lenders require borrowers to pay a certain fee in connection with each approval) and time-con-suming for our client.

b. Unencumbered Property. Alternatively, if the property is cur-rently unencumbered, landlord may be concerned about its own or a future purchaser’s ability to obtain financing. A landlord may use the specter of this hypothetical, future lender to argue against any tenant-friendly provisions in the lease, scoffing, “That provi-sion will make this lease unfinanceable.” As a practical matter, how-ever, lenders’ concerns regarding leases are relatively straight-forward, as set forth below.

2. What are a lender’s concerns regarding a lease?

Not surprisingly, a lender’s concerns regarding a lease are not unlike those of a purchaser; lender’s concerns break down into a few categories: (a) Financial Concerns

(1) Rent payment stream (2) Offset or abatement rights (3) Termination rights (4) Insurance (this will affect Tenant’s ability to pay rent) (5) Financial information

(b) Tenant’s Rights (1) Right of first offer/refusal (2) Option to purchase (3) Inconsistent rights of other tenants (e.g., ROFOs or exclusives)

(c) Landlord’s Obligations (1) Maintenance (2) Services (3) Indemnities

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(4) Restoration following condemnation/casualty (5) Construction to be completed/construction allowance

B. SUBORDINATION

When reviewing a lease, a lender also considers which document should have priority: the lease or the mortgage. Priority is generally determined by the “first in time, first in right” rule (e.g., a lease executed after a mort-gage is subordinate to it), but landlord, tenant and lender can contractually agree to reverse the order of priority by executing an SNDA, by address-ing the issue in the lease or by executing a subordination agreement.

1. What is an SNDA?

a. Definition. An SNDA is a contract pursuant to which the tenant and lender make certain agreements regarding the relative priority of the mortgage and the lease, a lender’s obligations following a foreclosure or deed in lieu thereof, and (perhaps) certain revisions to the lease document. Without an SNDA, each of the tenant and lender has privity of contract with landlord, but not with each other. A tenant often insists that landlord also execute the SNDA to confirm certain provisions contained therein.

b. Negotiating an SNDA. The following table addresses the various sections of an SNDA and the respective lender/tenant positions with respect to each section:

SNDA Provision Lender Position Tenant Position

Subordination of leasehold estate to mortgage

• Crux of SNDA for lender

• Description of mortgage should include renewals, amendments, etc.

• Acceptable, subject to terms of SNDA

Rent • Must be paid directly to lender if lender notifies tenant

• Require landlord to join in execution of SNDA and acknowledge tenant’s agree-ment

• Cannot be prepaid more than one month in advance

• Subject to amounts that must be prepaid under the lease (e.g., operating expenses, taxes, security deposit, etc.)

• May not be offset or abated

• Except as expressly provided in the lease or the SNDA

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Attornment • Tenant should agree to recognize lender or fore-closure purchaser as though it were landlord under the original lease

• Conversely, lender should agree to be bound by all provisions of the lease and perform all of landlord’s obligations thereunder

Defaults of prior landlord

• Notwithstanding the attornment agreement, lender shall not be liable for defaults of prior landlord

• Lender should be liable for defaults of which lender has received notice and an oppor-tunity to cure, either by cor-recting defaults itself or by allowing tenant to do so and offset rent (but no consequential damages); this is especially true if the lease limits landlord’s liability to its interest in the property, because tenant will have no recourse against anyone after lender steps into landlord’s shoes

• Alternatively, lender should be liable for all continuing defaults (query as to what constitutes a “continuing” default); lender may want to limit its liability to repair obligations, but tenant should resist this position (what if ten-ant has already exercised self-help rights at time of foreclosure, and needs to offset rent?)

• Lender also wants the opportunity to cure land-lord defaults

• Tenant does not want open-ended time period for lender to cure a landlord default; time period to cure should be limited

Lease amendments

• Lender does not want to be bound by any amend-ments or modifications to the lease that are made without its consent

• Tenant wants to have the flexi-bility to execute, without lender’s consent, amendments contem-plated by lease (e.g., exercise of expansion, ROFR, ROFO rights, lease commencement acknowl-edgment) or which do not mate-rially and adversely affect rent or rights and obligations of parties

• Lender should not be bound by amendments made without its consent, but failure to obtain lender’s consent should not be a default

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Lease termination • Lender does not want to be bound by any lease terminations made without its consent

• Tenant needs to have the right to terminate the lease as permitted in the lease (especially terminations in the event of casualty or condemnation)

Non-disturbance • Lender does not want to agree not to disturb ten-ant’s possession if there is a default under the lease or the SNDA

• Tenant will agree that lender may disturb possession in the event of a default beyond any applicable notice and cure period

Casualty and condemnation

• Lender wants the terms of the mortgage to govern

• Tenant wants the benefit of the deal it negotiated with landlord with respect to casualty and condemnation

Representations and warranties

• Lender does not want to be bound by any of them

• Lender approved the lease, and should be bound by all of its terms

• Before arguing this point, see whether there are any representations and warranties included in lease (e.g., repre-sentation re ownership of prop-erty, condition of premises)

• A possible compromise is to agree that lender will not be bound by representations and warranties with respect to the formation, authority, etc. of the original landlord, but will be bound by representations and warranties relating to the prop-erty itself

Hazardous Materials

• Lender does not want any obligations with respect to hazardous materials

• Lender reviewed Phase I as part of loan analysis

• Again, lender should be bound by all lease terms

Notices • Lender wants to receive all notices sent to landlord under the lease

• Tenant only wants to send notices of defaults that could give rise to termination, abate-ment, self-help or rent offset rights

Successors • Lender wants to be sure that the terms of the SNDA

• Tenant wants to be sure that the SNDA benefits its successors and assigns

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inure to the benefit of the purchaser in a foreclosure sale

Limitation of liability

• Lender wants its liability to be limited to its interest in the property

• This provision should match the limitation of liability provision in the lease, if any

Inconsistencies • Eliminate inconsistencies between lease and loan document or within lease itself

• Clarifications are acceptable, but tenant wants the benefit of its bargain

Lease retrades • Convert lease to lender’s dream lease by adding new burdens on tenant (e.g., inconsistent assign-ment provision, environ-mental indemnity)

• In your dreams

A SNDA that has been blacklined to show tenant’s proposed revisions is attached hereto as Attachment 1.

2. What if the parties don’t address priority in an SNDA or otherwise?

a. Lease Prior in Time (1) Lender takes the property subject to the terms of the lease (2) Amendment to lease after mortgage recorded might be voided

upon foreclosure b. Mortgage Recorded Prior to Lease Execution: Lease automatically

subordinated to mortgage unless lender elects otherwise (1) Majority Rule: Foreclosure does not terminate the lease unless

tenant is named in the foreclosure action (2) Minority Rule: Foreclosure action automatically terminates

lease

3. What are alternatives to an SNDA?

a. Lease Provision (1) Subordination of lease to current and future mortgages should

be conditioned upon execution of SNDA acceptable to tenant (tenant should not agree to execute whatever document lender offers him); attaching a form to the lease eliminates arguments

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later; if form is not attached, agree that SNDA shall not mate-rially increase tenant’s obligations or materially decrease ten-ant’s rights under lease

(2) Lender should not have the option of whether to subordinate the lease to the mortgage unless tenant is given the same option (this gives lender the flexibility to decide at the time of foreclosure what makes the most sense from a market rent perspective)

(3) Be careful about remedy if lender doesn’t obtain an SNDA; termination right isn’t helpful unless it is a termination right at the time of foreclosure (and even then, it may not be helpful if space is unique or tenant has invested a significant amount in the property); landlord should guard against open-ended termination right

(4) Lease provision eliminates need for SNDA, but you may still need a separate agreement in an automatic termination state (courts do not agree)

b. Subordination Agreement (1) Lender elects to subordinate mortgage to lease (especially

useful in automatic termination state) (2) Commentators generally agree that lender cannot pick and

choose which provisions will be subordinate (e.g., mortgage subordinate to all provisions of lease except casualty and con-demnation provisions)

c. Foreclosure Action: In majority of states, if lender does not name tenant in foreclosure action, lease does not terminate, so effectively mortgage is subordinate to it

d. Right to Cure Landlord Defaults (1) Where a lease is subordinate and a landlord refuses to obtain,

or a lender refuses to give, an SNDA, a tenant may protect itself by negotiating a right to receive notice of landlord defaults under the loan and a right to cure them

(2) Obviously, this only works (if at all) in a single-tenant triple net lease situation; tenant should guard against paying rent to landlord and debt service to lender

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e. Estoppel (1) Include SNDA provisions (2) Issue from tenant’s perspective: lender is not a party to the

estoppel

C. ESTOPPEL CERTIFICATES

In addition to approving a lease and addressing subordination in an SNDA, the lease or other document, a lender also asks the tenants of property with respect to which lender is providing financing to execute estoppel certificates for lender’s benefit. A borrower/landlord will usually resist providing estoppel certificates with respect to all tenants of a multitenant property, but lender will usually insist upon receiving estoppels from some combination of key tenants and a percentage of other tenants. As is the case with the SNDA, lender and tenant have different interests where an estoppel certificate is concerned. A lender wants an estoppel certificate to be so detailed that it need not review the lease. A tenant, on the other hand, wants to commit to as little as possible with respect to the lease. A tenant’s general rules with respect to estoppel certificates are as follows: 1. Attach an acceptable form of estoppel to the lease 2. Alternatively, include in the lease a list of statements that will be

included in the estoppel (do not include “and such other certifications as lender may reasonably request” language, or lender will ask for the moon)

3. Strike all easily ascertainable statements (e.g., number and length of options, ROFR, ROFO)

4. Include conflict/inconsistency language that explicitly provides that the lease prevails

5. Protect against liability if tenant has made a good faith mistake 6. Make certain statements (e.g., existence of default) to the actual,

then-current knowledge of the certifier without duty of investigation (maybe if a single person; lender should include a certification that the single person would have knowledge of the items included in the estoppel)

7. Do not include statement that there are no events which, with the giving of notice, passage of time or both, would constitute defaults

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8. Include the date of certification 9. Be careful about who is entitled to rely upon the estoppel An estoppel that has been blacklined to show tenant’s proposed revisions is attached hereto as Attachment 2.

D. CASES

Miscione v. Barton Development Co., 52 Cal. App. 4th 1320 (4th Cir. 1997): In this case, the plaintiff-lender sued a defendant-tenant, who had signed an SNDA, for defaulting on its rent and vacating the premises after its landlord foreclosed. The defendant-tenant claimed that the original deed of trust had priority, and extinguished all subordinate liens when the borrower/original landlord foreclosed. The court ruled against the defend-ant-tenant, heavily relying on the “attornment” portion of the SNDA. The court held that the borrower/original landlord’s “foreclosure did not terminate the obligations of the tenant under the lease. The tenant had contracted to alter the priorities otherwise established by law. Defendants, in the clear language of the lease, had agreed to attorn to the purchaser at a foreclosure sale.”

CW Capital Asset Management, LLC v. Chicago Properties, LLC, 610 F.3d 497 (7th Cir. 2010). This case held that the plaintiff-servicer cannot sue under an SNDA for funds the borrower-defendant received from a tenant if the borrower-defendant has not actually defaulted on the loan.

In this case, the tenant Blockbuster had defaulted on its lease and the suit resulted in a settlement, which settlement funds the servicer-plaintiff claimed it had the right to. The borrower-defendant continued to make full monthly mortgage payments. The SNDA had the standard provision stating that the lender is not bound by any pre-paid rent or any modifica-tion in the lease without the lender’s consent that reduces the tenant’s monetary obligations. The 7th Circuit ruled against the plaintiff-servicer, holding that the servicer-plaintiff was not “injured by not receiving rent payments from Blockbuster, for had it received them it would have applied them to reduce the debt that [borrower-defendant] owes it, and it has not presented evidence that Blockbuster’s failure to direct rent to it has impaired the value of its collateral.”

Because the borrower-defendant was still making all mortgage pay-ments in full, Blockbuster’s liability under the SNDA was not triggered. (Secondary, but still important note: The 7th Circuit also held that a set-tlement does not constitute pre-paid rent anyway.) The court did note that

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the borrower-servicer could have successfully brought a claim under the mortgage agreement, which required the borrower to place in escrow “all funds received by Mortgagor from tenants in connection with the can-cellation of any Leases.”

E. CONCLUSION

A lender who loans money to a borrower who is a party to a lease, either as a landlord or a tenant, can spend an inordinate amount of time and money clarifying the rights and responsibilities of the other party to the lease, and lender may legitimately ask itself whether the risks of failing to explicitly address subordination justify the expense of obtaining an SNDA or estoppel. In states in which the lease automatically terminates in a foreclosure action if the parties have not otherwise addressed sub-ordination, obtaining an SNDA or otherwise addressing subordination is critical if lender wants to preserve the lease. In other states, the answer is unclear. As for the estoppel, the document is probably important enough that it is worth the time spent wrangling over it. Lenders who elect to obtain SNDAs and estoppels are probably best served by requiring bor-rower to pay for the costs of obtaining them, and landlord would be wise to require a tenant to pay for an SNDA that it requests pursuant to its lease. Cat-herding is much more palatable when it’s on someone else’s nickel.

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ATTACHMENT 1

SNDA FORM BLACKLINED TO SHOW TENANT COMMENTS

SUBORDINATION NONDISTURBANCE

AND ATTORNMENT AGREEMENT DEFINED TERMS

Execution Date: Lender & Address: Tenant & Address:

Landlord & Address: Loan: A first mortgage loan in the original principal amount of

$_____________ from Lender to Landlord.

Note: A Promissory Note executed by Landlord in favor of Lender in the amount of the Loan dated as of ______________________________.

Mortgage: A Mortgage, Security Agreement and Fixture Filing dated as of ________________ executed by Landlord, to Lender securing repayment of the Note to be recorded in the records of the County in which the Property is located.

Lease and Lease Date: The lease entered into by Landlord and Tenant dated as of ___________________ covering the Premises.

[Add amendments]

Property: The Property is more particularly described on Exhibit A.

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THIS SUBORDINATION, NONDISTURBANCE AND ATTORN-MENT AGREEMENT (the “Agreement”) is made by and among Tenant, Landlord, and Lender and affects the Property described in Exhibit A. Certain terms used in this Agreement are defined in the Defined Terms. This Agreement is entered into as of the Execution Date with reference to the following facts: A. Landlord and Tenant have entered into the Lease covering certain

space in the improvements located in and upon the Property (the “Premises”).

B. Lender has made or is making the Loan to Landlord evidenced by the Note. The Note is secured, among other documents, by the Mortgage.

C. Landlord, Tenant and Lender all wish to subordinate the Lease to the lien of the Mortgage.

D. Tenant has requested that Lender agree, subject to the terms of this Agreement, not to disturb Tenant’s rights in the Premises pursuant to the Lease in the event Lender forecloses the Mortgage, or acquires the Property pursuant to the trustee’s power of sale contained in the Mortgage or receives a transfer of the Property by a conveyance in lieu of foreclosure of the Property (collectively, a “Foreclosure Sale”) but only if Tenant is not then in default under the Lease and Tenant attorns to Lender or a third party purchaser at the Foreclosure Sale (a “Foreclosure Purchaser”).

NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows: 1. Subordination. TheSubject to the terms of this Agreement, the Lease

and the leasehold estate created by the Lease and all of Tenant’s rights under the Lease are and shall remain subordinate to the Mort-gage and the lien of the Mortgage, to all rights of Lender under the Mortgage and to all renewals, amendments, modifications and exten-sions of the Mortgage.

2. Acknowledgments by Tenant. Tenant agrees that: (a) Tenant has notice that the Lease and the rent and all other sums due under the Lease have been or are to be assigned to Lender as security for the Loan. In the event that Lender notifies Tenant of a default under the Mortgage and requests Tenant to pay its rent and all other sums due under the Lease to Lender, Tenant shall pay such sums directly to Lender or as Lender may otherwise request. (b) Tenant shall send a

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copy of any notice or statementof a Landlord default that could give rise to termination, abatement, self-help or rent offset rights under the Lease to Lender at the same time Tenant sends such notice or statement to Landlord. (c) This Agreement satisfies any condition or requirement in the Lease relating to the granting of a nondisturb-ance agreement.

3. Foreclosure and Sale. In the event of a Foreclosure Sale, (a) So long as Tenant complies with this Agreement and is not in

default under any of the provisions of the Lease, beyond any applicable notice and cure period, (a) the Lease shall continue in full force and effect as a direct lease between Lender and Tenant, and Lender will not disturb the possession of Tenant, and (b) Tenant shall not be named or joined as a party in any suit, action or proceeding for the foreclosure of the Lender or the enforcement of any rights under the Mortgage (unless the Tenant is a necessary party under applicable law, and then only for such purposes and not for the purpose of termination the Lease), subject to this Agreement. To the extent that the Lease is extinguished as a result of a Foreclosure Sale, a new lease shall automatically go into effect upon the same provisions as contained in the Lease between Landlord and Tenant, except as set forth in this Agreement, for the unexpired term of the Lease. Tenant agrees to attorn to and accept Lender as landlord under the Lease and to be bound by and perform all of the obli-gations imposed by the Lease, or, as the case may be, under the new lease, in the event that the Lease is extinguished by a Foreclosure Sale. Upon Lender’s acquisition of title to the Prop-erty, Lender will perform all of the obligations imposed on the Landlord by the Lease except as set forth in this Agreement; provided, however, that Lender shall not be: (i) liable for any act or omission of a prior landlord (including Landlord), except to the extent that such act or omission is of a continuing nature, and subject to the terms of Section 6 below; or (ii) subject to any offsets or defenses that Tenant might have against any prior landlord (including Landlord), except to the extent that such defense or offsets relates to a default of a continuing nature or such offset right arises pursuant to this Agreement; or (iii) bound by any rent or additional rent which Tenant might have paid in advance to any prior landlord (including Landlord) for a period in excess of one month or by any security deposit,

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cleaning deposit or other sum that Tenant may have paid in advance to any prior landlord (including Landlord), except to the extent that such prepayment is required under the terms of the Lease (e.g., taxes and operating expenses); or (iv) bound by any amendment, modification, assignment or termination of the Lease made without the written consent of Lender; (v) obligated or liable with respect to any representations, warran-ties or indemnities contained in the Lease; or (vi) liable to Tenant or any other party for any conflict between the provi-sions of the Lease and the provisions of any other lease affect-ing the Property which is not entered into by Lenderprovided, however, that Lender’s consent shall not be required for any amendment or modification (A) arising out of the exercise of any of Tenant’s expansion, right of first refusal, renewal or other rights expressly set forth in the Lease; (B) confirming the commencement or expiration dates of the Lease; (C) relating to any assignment or sublease permitted under the Lease with-out Landlord’s consent; or (D) that does not materially and adversely affect the amount of rent payable by Tenant or Landlord’s or Tenant’s obligations and rights under the Lease.

(b) Upon the written request of Lender after a Foreclosure Sale, the parties shall execute a lease of the Premises upon the same provisions as contained in the Lease between Landlord and Tenant, except as set forth in this Agreement, for the unexpired term of the Lease.

(c) Notwithstanding any provisions of the Lease to the contrary, from and after the date that Lender acquires title to the Property as a result of a Foreclosure Sale, (i) Lender will not be obligated to expend any monies to restore casualty damage in excess of available insurance proceeds; (ii) tenant shall not have the right to make repairs and deduct the cost of such repairs from the rent without a judicial determination that Lender is in default of its obligations under the Lease; (iii) in no event will Lender be obligated to indemnify Tenant, except where Lender is in breach of its obligations under the Lease or where Lender has been actively negligent in the performance of its obligations as landlord; and (iv) other than determination of fair market value, no disputes under the Lease shall be subject to arbitration unless Lender and Tenant agree to submit a particular dispute to arbitration.

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4. Subordination and Release of Purchase Options. Tenant represents that it has no right or option of any nature to purchase the Property or any portion of the Property or any interest in the Grantor. To the extent Tenant has or acquires any such right or option, these rights or options are acknowledged to be subject and subordinate to the Mortgage and are waived and released as to Lender and any Fore-closure Purchaser.

5. Acknowledgment by Landlord. In the event of a default under the Mortgage, at the election of Lender, Landlord acknowledges and agrees that Tenant shall and is directed to pay all rent and all other sums due under the Lease to Lender.

6. Construction of Improvements. Lender shall not have any obligation or incur any liability with respect to the completion of tenant improve-ments for the Premises; provided, however, that in the event that (a) any tenant improvements to be completed by Landlord under the Lease have not been completed, or (b) any tenant improvement allowance has not been paid at the time Lender becomes Landlord under the Lease, and Lender fails to complete such improvements and/or pay such allowance to Tenant on or before ten (10) days after written notice, then Tenant shall be entitled to complete such improvements and offset the cost of such improvements, together with any unpaid allowance, against the rentals next due under the Lease.

7. Notice. All notices under this Agreement shall be deemed to have been properly given if delivered by overnight courier service or mailed by United States certified mail, with return receipt requested, postage prepaid to the party receiving the notice at its address set forth in the Defined Terms (or at such other address as shall be given in writing by such party to the other parties) and shall be deemed complete upon receipt or refusal of delivery.

8. Miscellaneous. Lender shall not be subject to any provision of the Lease that is inconsistent with this Agreement; provided, however, that notwithstanding anything to the contrary contained in this Agree-ment, the terms of the Lease shall continue to govern with respect to the disposition of any insurance proceeds or eminent domain awards, and any obligations of Landlord to restore the real estate of which the Premises are a part shall be limited, insofar as they apply to Lender, to insurance proceeds or eminent domain awards received by Lender after the deduction of all costs and expenses incurred in obtaining such proceeds or awards. Nothing contained in this

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Agreement shall be construed to derogate from or in any way impair or affect the lien or the provisions of the Mortgage. This Agreement shall be governed by and construed in accordance with the laws of the State of in which the Property is located.

9. Liability and Successors and Assigns. In the event that Lender acquires title to the Premises or the Property, Lender’s liability to Tenant shall be limited to its interest in the Property and all rents and proceeds therefrom. This Agreement shall run with the land and shall inure to the benefit of the parties and, their respective successors and permitted assigns including a Foreclosure Purchaser. If a Foreclosure Purchaser acquires the Property or if Lender assigns or transfers its interest in the Note and Mortgage or the Property, all obligations and liabilities of Lender under this Agreement for the period beginning on the date of such acquisition, assignment or transfer shall terminate and be the responsibility of the Foreclosure Purchaser or other party to whom Lender’s interest is assigned or transferred. The interest of Tenant under this Agreement may not be assigned or transferred except in connection with a transfer that is permitted under the Lease of its interest in the Lease or an assignment of its interest in the Lease to which Landlord has been consented to by Lender.

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IN WITNESS WHEREOF, the parties have executed this Subor-dination, Nondisturbance and Attornment Agreement as of the Execution Date.

LENDER:

__________________________________

By________________________________ Its________________________________

TENANT:

__________________________________

By________________________________ Its ________________________________

LANDLORD:

__________________________________

By________________________________ Its________________________________

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EXHIBIT A

PROPERTY DESCRIPTION

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ATTACHMENT 2

ESTOPPEL FORM BLACKLINED TO SHOW TENANT COMMENTS

TENANT: ______________________________ DATE OF LEASE: ______________________________ AMENDED: ______________________________ PREMISES: ______________________________

ESTOPPEL CERTIFICATE To: _______________________ _______________________ _______________________ Re: Lease between ____________, a ____________, and

____________, a ___________

The undersigned hereby certifies to __________________ (“Buyer”) and _________________________ (“Lender”) as follows as of the date of this certificate: 1. The undersigned is the “Tenant” under the above-referenced lease

(“Lease”) covering the above-referenced Premises (“Premises”). A true, correct and complete copy of the Lease (including all adden-dums, riders, amendments, modifications and supplements thereto) is attached as Exhibit “1”.

2. The Lease constitutes the entire agreement between landlord under the Lease (“Landlord”) and Tenant with respect to the Premises and the Lease has not been modified, changed, altered or amended in any respect except as set forth above.

3. The term of the Lease commenced on ____________, and, including any presently exercised option or renewal term, will expire on ____________. Tenant has ______ options to extend the term of the Lease upon the terms and conditions more particularly set forth in the Lease. Tenant has accepted possession of the Premises and is the actual occupant in possession and has not sublet, assigned or hypothecated all or any portion of Tenant’s leasehold interest. All improvements to be constructed on the Property by Landlord have been completed and accepted by Tenant and any tenant construction allowances have been paid in full.

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4. As of the date of this Estoppel Certificate, to the best of Tenant’s knowledge, there exists no breach or default, nor state of facts which, with notice, the passage of time, or both, would result in a breach or default on the part of either Tenant or Landlord. To the best of Ten-ant’s knowledge, except as provided herein, no claim, controversy, dispute, quarrel or disagreement exists between Tenant and Landlord.

5. Pursuant to the Lease, Tenant is currently obligated to pay rental in monthly installments of $_______________ per month and monthly installments of rental have been paid through ___________________. Pursuant to the Lease, Tenant is obligated to pay monthly installments of common area maintenance charges equal to 100% of the common area maintenance costs of the project, in the amount of $___________. No other rent has been paid in advance under the Lease and Tenant has no claim or defense against Landlord under the Lease and is asserting no offsets or credits against either the rent or Landlord under the Lease. Tenant has no claim against Landlord for any secu-rity deposit or other deposits. As of the date hereof, the outstanding balance due to Tenant pursuant to Section __ of the Lease is $_______________. [This is the construction allowance.]

6. Tenant has no option or preferential right to purchase all or any part of the Premises (or the real property of which the Premises are a part) nor any right or interest with respect to the Premises other than as Tenantmay be described under the Lease.

7. Tenant has no option, right of first offer or right of first refusal to lease or occupy any other space within the property of which the Premises are a part, except as may be set forth in the Lease. Tenant has no right to renew or extend the terms of the Lease except as may be set forth in the Lease.

8. Tenant has made no agreement with Landlord or any agent, repre-sentative or employee of Landlord concerning free rent, partial rent, rebate of rental payments or any other type of rental or other conces-sion except as expressly set forth in the Lease.8. There has not been filed by (or to Tenant’s knowledge, against) Tenant a petition in bankruptcy, voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangement under the bankruptcy laws of the United States, or any state thereof, or any other action brought under said bankruptcy laws with respect to Tenant.

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9. All insurance required of Tenant by the Lease has been provided by Tenant and all premiums have been paid.

10. This Estoppel Certificate is made to Buyer in connection with the prospective purchase by Buyer, or Buyer’s assignee, of the pur-chase agreement pursuant to which Buyer or its assignee will purchase the property containing the Premises (“Assignee”). This Estoppel Certificate may be relied on by Buyer, Buyer’s assignee, Lender and any other party who acquires an interest in the Premises in connection with such purchase or any person or entity which may finance such purchaseAssignee or the Lender. The person executing this Estoppel Certificate on behalf of Tenant has the right, power and authority to execute same. In the event of a conflict or inconsistency between any statement or certification in this estoppel and any provision in the Lease, the Lease provision shall control.

Dated this _____ day of _______________, 2016. “Tenant” __________________________________________, a _____________________________ By: _______________________________ Name: _____________________________ Its: ________________________________

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EXHIBIT “1”

Copy of Lease (including all addendums, riders, amendments, modifica-tions and supplements thereto) is attached.

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