Real Estate Journal — Owners, Developers & Managers — October 24 - November 13, 2014 — 3B
www.marejournal.com
M id A tlantic
O wners , D evelopers & M anagers C By Brian Rader, Esq., Jardim, Meisner & Susser, P.C. Juggling competing interests in a commercial lease negotiation onsiderations during a commercial lease ne- gotiation must go well
presents
matic subordination provision, a commercial tenant must demand a non-disturbance agreement to ensure its pro- tection. A non-disturbance agreement serves to protect a commercial tenant from post-foreclosure disruption or ejectment. Legal considerations also arise after a landlord/borrower defaults, but prior to the final judgment of foreclosure. In most cases, mortgage docu- ments will permit a lender to collect rent or other profits from commercial tenants occu- pying the mor gaged property.
Also known as an “Assign- ment of Rents and Leases,” this agreement is intended to secure the loan by permit- ting the lender to collect rents directly from a commercial tenant immediately upon the landlord’s default on the loan. However, a lender may pre- fer to collect rents through a court-appointed rent receiver as failure to do so may result in a finding that the lender is a “mortgagee in possession.” If a lender is declared to be a “mortgagee in possession,” the lender risks exposing itself to continued on page 4B
beyond just the “material t e rms . ” I n many cases, a commercial tenant is de- tached from the financial circumstanc- es surround-
Guests of Honor: Jeannie Kwon, MTA Capital Construction Caroline Weiss, Weidlinger Associates * for more information & reservations * Professional Women in Construction 212-486-7745 * pwc@pwcusa.org * www.pwcusa.org/ny PWC is a non-prot 501(c)3 organization Contributions are tax deductible Cancellation: 48 hour notice
Brian Rader
ing the subject property and its landlord. However, the presence of lienholders on the subject property, as well as the likelihood of foreclosure, may have far reaching implica- tions on a commercial tenant’s ability to quietly occupy the subject property during the expected lease term. In fact, a commercial lease negotiation may significantly impact the legal rights of tenants, land- lords and lenders. Generally, commercial ten- ants are not afforded the same protections as residential ten- ants. For example, the New Jersey Fair Foreclosure Act only permits a foreclosing creditor to eject a residential tenant “for cause” as out- lined under the New Jersey Anti-Eviction Act. There are no such protections for com- mercial tenants, and upon foreclosure, absent proper contractual protections, com- mercial tenants may be ejected from the property, even if the commercial tenant is in good standing. Commercial tenants and lienholders have competing interests; however, after care- ful consideration of those interests, mutually agreeable terms can be memorialized in a single document more formally known as a Subor- dination, Non-Disturbance and Attornment Agreement (“SNDA”). A lender may require a ten- ant to subordinate its interests in its lease to the mortgage. This can be accomplished through the SNDA, or in many instances, a lease may contain an “automatic subordination” provision. In that case, no ad- ditional document is needed to evidence the subordination. A lender may also require a tenant to expressly attorn or agree to recognize the lender as its direct landlord post- foreclosure. This may be ef- fectuated through an SNDA or directly in the lease. If a lease contains an auto-
MMSON_MidlanticRealEstate_B&W_Layout 1 5/9/14 11:51 AM Page 1
they wrote the policy. we make sure they write the check.
M. MILLER & SON L ICENSED PUBL IC INSURANCE ADJUSTERS SINCE 1960
FIRE | WATER | WINDSTORM | COLLAPSE | BUSINESS INTERRUPTION MULTI-FAMILY, COMMERCIAL, HOSPITALITY, INDUSTRIAL, AND RESIDENTIAL PROPERTIES
n 24/7 Comprehensive Emergency Services n Policy Analysis n Property Damage Assessment n Full Claim Preparation
n Negotiate Loss and Values n Negotiate Maximum Settlement n Facilitate Prompt Reimbursement n Third-generation, Family-owned
NEW JERSEY | NEW YORK | PUERTO RICO Headquarters: 1211 Liberty Avenue Hillside, NJ 07205 14 Penn Plaza | 225 West 34th Street, 9th floor New York, NY 10122
Toll Free: 877MMiller (877-664-5537) www.mmillerson.com
PROUD MEMBERS OF
Made with FlippingBook - Online Brochure Maker