Question 1

How do non-disturbance agreements work in Florida foreclosure?

Accepted Answer

Florida foreclosure context: Florida is a judicial foreclosure state where foreclosures proceed through the courts. During foreclosure: the property may be in litigation for 1-3 years, the tenant’s lease may be terminated if the lease is junior to the mortgage (entered after the mortgage was recorded), and without an SNDA, the tenant faces uncertainty about their right to remain. With an SNDA: the lender agrees to honor the tenant’s lease through and after foreclosure, the tenant agrees to attorn to the new owner, and the tenant’s business continuity is protected.

Question 2

What Florida-specific provisions should an SNDA include?

Accepted Answer

FL provisions: judicial foreclosure timeline (the SNDA should address the tenant’s obligations during the potentially lengthy foreclosure process), receiver provisions (if a receiver is appointed to manage the property during foreclosure, the SNDA should specify that the tenant’s lease rights are preserved), deficiency judgment provisions (the SNDA should clarify that the tenant is not liable for the landlord’s mortgage deficiency), and insurance and maintenance (during foreclosure, the property may deteriorate; the SNDA should address responsibility for insurance and maintenance if the landlord is in default). Florida documentary stamp tax may apply to the recording of the SNDA.

Question 3

Can a tenant negotiate an SNDA after the lease is signed in Florida?

Accepted Answer

Post-lease SNDA: yes, but it is more difficult. The tenant has less leverage after the lease is signed. Best practice: negotiate the SNDA before signing the lease (make the SNDA a condition of the lease). If negotiating after: the lender may charge a fee for reviewing and executing the SNDA, the lender may require modifications to the lease (such as eliminating provisions that are unfavorable to the lender), and the lender is not obligated to agree to the SNDA. Having experienced counsel negotiate the SNDA is critical to protecting the tenant’s interests.

Non-Disturbance Agreement: in Florida

Non-Disturbance Agreements in Florida

FL Foreclosure Context

FL-Specific Provisions

Timing

Related Terms

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