NYC-based boutique law firm Pardalis & Nohavicka brings the latest legal updates from the world of real estate to PropertyShark. Pardalis & Nohavicka handles an eclectic array of matters, representing individuals and business owners in civil litigation, criminal cases and business transactions, currently litigating and representing clients throughout the United States and around the world.

When a landlord looks to make their next big move – whether it’s refinancing a loan or selling their property – certain provisions in their original lease with tenants determine the process and rights of both parties.

A simple scenario could be when a landlord chooses to refinance, which is when a mortgage is replaced by a new loan. This could be done to lower the landlord’s interest rate or if the landlord wants to borrow more money against the property.

An Estoppel Certificate and/or a subordination, non-disturbance and attornment agreement (SNDA) can be beneficial for the landlord to prove their credibility to future lenders and save money.

The Role of the Tenant in Refinancing

A reliable tenant who consistently pays their rent on time improves the landlord’s ability to refinance the loan. This is because the lender generally reviews the accounts payable – including rents collected – to determine whether they are paid in full and on time.

Essentially, if a tenant can pay the rent to the landlord, then the landlord can make their mortgage payments on time. Conversely, if the tenant misses a rent payment or is inconsistent, it could delay the landlord’s mortgage payments (depending upon the landlord’s financial dependency on their monthly rent collection).

In this case, lenders will need some sort of reassurance of compliance by both parties amd might request to see an Estoppel Certificate prior to issuing a potential loan. An Estoppel Certificate is a legal affidavit made and signed by the tenant that confirms the terms and details of agreements made between landlords and tenants. In it, the tenant states certain facts, including the term of their lease, the monthly rent amount and that all rents have been paid thus far.

Although it is usually difficult to receive Estoppel Certificates from all residential tenants in a larger building, they are reassuring to lenders because they show the acceptance of true agreements made by both parties. This reinforces that the rent has been or will be paid and that the landlord has been fulfilling their duties set in the lease.

SNDA Agreement

Alternatively, in scenarios in which a landlord might take out a loan, sell their property or go through foreclosure, an SNDA agreement could be required. This document includes agreements made between tenants, landlords and lenders, and is broken down into three parts: subordination, non-disturbance and attornment.

  • The subordination clause specifies that a tenant will be subordinate to the rights of the landlord’s lender.
  • The non-disturbance clause ensures a tenant’s rights without disruption to their leased premises even if there is a transfer in ownership. As long as the tenant is in compliance with the lease, the non-disturbance clause allows their tenancy to continue in peace. 
  • The attornment portion is the official acknowledgement that a tenant will continue to oblige to the terms of the lease and pay rent even in the event that ownership changes during the agreed-upon duration of the lease. With this clause in place, the tenant agrees to recognize the lender as the new landlord, even in the event of foreclosure.

This type of agreement is usually important to commercial tenants that sign long-term leases. Although it’s not always easy for a landlord to make this type of agreement, it can help to secure the confidence of a tenant in the future of their tenancy.

But, ultimately, an Estoppel Certificate or SNDA agreement is for the protection of the landlord. These clauses add a sense of security and foster a better relationship between landlords, lenders and tenants.


Taso Pardalis

Taso Pardalis is a founding partner of the Law Offices of Pardalis and Nohavicka, a leading full- service NYC law firm with offices in Manhattan, Queens and WeWork. Taso may be a well-known attorney with many cases making headlines in major media outlets, but at heart, he is a true entrepreneur that believes in supporting the small business community. His areas of concentration are: Intellectual Property, Trademarks, Corporate, Business Law and Real Estate Law.

Nataly Goldstein

Real Estate and Corporate Transactions Attorney  Nataly Goldstein is a graduate of Cardozo School of Law, where she served as President of the Real Estate Law Association.  She is experienced in both residential and commercial real estate transactions, as well as representing large banks, such as Wells Fargo and Citibank.

Sofia Stefanou

Sofia Stefanou is a law clerk at Pardalis & Nohavicka. She is currently a student at NYU’s Schack School of Real Estate. Sofia is a member of NYU’s Undergraduate Real Estate Club, Women in Real Estate Club, and Hellenic Heritage Association. She is currently a member of the real estate law team at Pardalis & Nohavicka.

Eliza Theiss

Eliza Theiss

Eliza Theiss is a senior writer reporting real estate trends in the US. Her work has been cited by CBS News, Curbed, The Los Angeles Times, and Forbes among others. With an academic background in journalism, Eliza has been covering real estate since 2012. Before joining PropertyShark, Eliza was an associate editor at Multi-Housing News and Commercial Property Executive. Eliza writes for both PropertyShark and CommercialEdge. Reach her at [email protected]