A Maine Subordination, Non-Disturbance, and Attornment Agreement (SODA) is a legal document that outlines the rights and responsibilities of the parties involved in a commercial lease governed by a commercial loan. It typically involves three parties: the landlord, the tenant, and the lender. Maine SODA agreements are essential to protect the interests of all parties and ensure the smooth operation of the leased property, especially in the event of default or foreclosure. This agreement establishes the priority of interests between the lender and the tenant, ensuring that the lender's lien takes precedence in case of default. The non-disturbance clause within the agreement prevents the lender from interfering with the tenant's rights and possession of the leased property, even in the case of foreclosure. This clause assures the tenant that they can continue operating their business without disruption, regardless of the mortgagor's default. Furthermore, an attornment clause within the Maine SODA agreement obligates the tenant to recognize and acknowledge the lender as their new landlord if the property is foreclosed upon. This clause ensures that the lender can manage the leased property effectively and collect rent directly from the tenant, who remains bound by the terms of their original lease. In Maine, there may be different types of SODA agreements available, including: 1. Commercial Mortgage Subordination, Non-Disturbance, and Attornment Agreement: This SODA outlines the rights and obligations specific to a commercial property, ensuring that the tenant's possession and lease terms are protected in the event of foreclosure. 2. Sublease Subordination, Non-Disturbance, and Attornment Agreement: In situations where the tenant subleases the property to another party, this SODA establishes the relationship between the subtenant, the landlord, and the lender. It stipulates that the sublease will remain subordinate to the loan, and the subtenant will recognize the lender as the new landlord if necessary. 3. Ground Lease Subordination, Non-Disturbance, and Attornment Agreement: This SODA is applicable when the commercial property is subject to a ground lease. It ensures that the lender's interests are protected and the tenant acknowledges the lender as the new landlord if the ground lease is terminated or the property is foreclosed. In conclusion, the Maine Subordination, Non-Disturbance, and Attornment Agreement of a Lease for a Commercial Loan protects the rights of all parties involved in a commercial lease transaction. Whether it is a commercial mortgage, sublease, or ground lease, having a proper SODA ensures the tenant can continue conducting their business undisturbed while safeguarding the interests of the lender.
Maine Subordination, Non-Disturbance, and Attornment Agreement of a Lease regarding a Commercial Loan
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The Subordinated Lender hereby agrees that all Subordinated Obligations (as defined below) and all of his right, title and interest in and to the Subordinated Obligations shall be subordinate and junior in right of payment to the Senior Lender Loan and all rights of Senior Lender in respect of the Senior Lender Loan, ...
A subordinate clause is a clause that cannot stand alone as a complete sentence; it merely complements a sentence's main clause, thereby adding to the whole unit of meaning. Because a subordinate clause is dependent upon a main clause to be meaningful, it is also referred to as a dependent clause.
A subordinated loan is debt that's only paid off after all primary loans are paid off, if there's any money left. It's also known as subordinated debt, junior debt or a junior security, while primary loans are also known as senior or unsubordinated debt.
Subordination agreements are used to legally establish the order in which debts are to be repaid in the event of a foreclosure or bankruptcy. In return for the agreement, the lender with the subordinated debt will be compensated in some manner for the additional risk.
A subordination agreement is a legal document that establishes one debt as ranking behind another in priority for collecting repayment from a debtor. The priority of debts can become extremely important when a debtor defaults on their payments or declares bankruptcy.
The primary effect of an SNDA is that the tenant agrees to subordinate its lease to the mortgage in exchange for the lender agreeing not to disturb the tenant if the lender forecloses its superior security interest in the real property.
The attornment clause requires tenants to acknowledge any new owner of the property as the landlord.
What is Subordination? Subordination is putting something in a lower position or rank. Therefore, a subordination agreement puts the lease below the mortgage loan in priority. Mortgage lenders want the leases to be subordinate to the mortgage. That way, the mortgage loan is paid first if there is a foreclosure.