Attornment And Non Disturbance Agreement Template for Canada

When you're involved in a commercial real estate transaction where a mortgaged property has existing tenants, you need an Attornment And Non Disturbance Agreement (SNDA) to protect all parties' interests. This tri-party agreement creates a balanced framework that secures the lender's mortgage priority while preserving tenant rights and clarifying landlord obligations under Canadian law.

When do you need this document?

You require an SNDA whenever a commercial property owner seeks financing against a property with existing leases, or when new tenants are signing leases on mortgaged properties. This situation commonly arises during property acquisitions, refinancing transactions, or when landlords need capital improvements financing. The agreement becomes particularly crucial when lenders require lease subordination as a loan condition, or when tenants demand protection against potential foreclosure disruption. In Canada's complex commercial property landscape, most institutional lenders and sophisticated tenants insist on SNDAs to clarify their respective rights and obligations.

Key legal considerations

Your SNDA must carefully balance three competing interests through specific clauses. The subordination component places the tenant's lease interest below the mortgage in priority, protecting the lender's security. Non-disturbance provisions guarantee that tenants can remain in possession and continue lease operations even if the landlord defaults, provided the tenant isn't in breach. Attornment clauses require tenants to recognize a new owner (often the lender or purchaser at foreclosure) as their landlord. Critical considerations include defining what constitutes "material defaults" that could void non-disturbance protection, establishing notice requirements for all parties, and determining which lease modifications require consent. You must also address estoppel requirements, insurance obligations, and how the agreement interacts with existing guarantees or security deposits.

Legal requirements in Canada

Canadian SNDAs must comply with both federal and provincial legislation that varies by jurisdiction. Provincial Commercial Tenancies Acts govern landlord-tenant relationships and may limit certain subordination terms or require specific tenant protections. The federal Bankruptcy and Insolvency Act affects how these agreements operate during insolvency proceedings, potentially overriding some provincial protections. Your agreement must consider provincial Land Registration Acts for proper recording and priority determination. Personal Property Security Acts may impact how security interests in tenant improvements or equipment are treated. Corporate tenants must ensure compliance with provincial business corporations acts, while individual tenants may have additional protections under consumer legislation. Some provinces require specific language or disclosures in commercial lease subordinations, and court decisions in your jurisdiction may influence enforcement. Professional legal review ensures your SNDA meets all applicable federal and provincial requirements while protecting your specific interests in the transaction.