Attornment Explained 2025: Costs, Benefits, and Real Estate Impact
Discover the essential details of attornment, its role in real estate leases, and how it protects tenants and landlords during ownership changes.
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What Is Attornment?
Attornment refers to the tenant's formal recognition of a new property owner as their landlord, even when no prior legal rights have been established. This concept primarily applies in real estate, especially during ownership transitions, ensuring continuity in landlord-tenant relationships.
When commercial properties change hands, attornment often features in subordination, non-disturbance, and attornment (SNDA) agreements. These agreements require tenants to acknowledge the new owner as their landlord and maintain rent payments regardless of whether the property is sold or foreclosed.
Key Insights
- Attornment is mainly relevant in real estate transactions involving property ownership changes.
- It formalizes the relationship between tenants and new property owners.
- Tenants leasing properties that change ownership during their lease term are typically required to attorn.
- Attornment agreements only alter the rights of the new owner when signed by the tenant.
Understanding How Attornment Works
Attornment plays a crucial role in real property law by recognizing the tenant's acceptance of a new landlord without creating new legal rights unless agreed upon. If a tenant refuses to sign an attornment agreement, landlords may have grounds for eviction.
In SNDA agreements, the attornment clause ensures that the new owner assumes all rights and responsibilities of the previous landlord. Tenants must continue paying rent to the new owner, safeguarding the landlord's income stream despite ownership changes.
Attornment in Commercial Leasing Contexts
Commercial leases frequently include SNDA agreements, which define the tenant's and landlord's rights and often involve third parties like lenders or buyers. The SNDA consists of three components:
- Subordination clause (S)
- Non-disturbance clause (ND)
- Attornment clause (A)
The attornment clause mandates that tenants recognize a new property owner as their landlord whether the ownership change occurs through a sale or foreclosure. Tenants must continue rent payments under the existing lease terms.
The subordination clause allows tenants to subordinate their lease interests to a lender's mortgage, enabling landlords to secure financing. This clause may permit lenders to terminate leases in foreclosure scenarios.
The non-disturbance clause protects tenants by ensuring their right to occupy leased premises even if the property is foreclosed, provided they meet lease obligations.
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