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Subordination and Attornment Agreement

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SUBORDINATION AND ATTORNMENT AGREEMENT
LANDLORD – TENANT - LENDER

THIS SUBORDINATION AND ATTORNMENT AGREEMENT (this "Agreement") is made as of the day of , , by and between , a (the "Lender"), , a (the "Tenant"), and , a (the "Landlord").

W I T N E S S E T H:

WHEREAS, the Tenant and the Landlord have entered into that certain lease agreement, dated , (the "Lease"), and recorded in Book , Page in the office of the of County, , covering the property described on Exhibit A attached hereto and made a part hereof (the "Property"); and

WHEREAS, the Lender has made a commitment to make a loan to the Landlord in the original principal amount of up to $ (the "Loan") to be secured, inter alia, by a Deed of Trust, Security Agreement and Assignment of Rents and Leases (the "Deed of Trust") covering, among other things, the Property and the rents and leases with respect thereto, including, without limitation, the Lease; and

WHEREAS, under the terms of the Lease, the Tenant is required to subordinate the Tenant's rights under the Lease to a deed of trust encumbering the Property and to attorn to the purchasers, assigns, grantees or transferees of the Property, and the parties hereto desire to have the Lease made subject and subordinate to the Deed of Trust.

NOW THEREFORE, in consideration of their respective covenants herein made, the parties hereto agree as follows:

1. The Tenant, for itself, its successors and assigns, hereby covenants and agrees that the Lease shall be and the same is hereby made subordinate to the Deed of Trust and to any extensions and modifications thereof and supplements thereto with the same force and effect as if the Deed of Trust had been executed, acknowledged, delivered and recorded prior to the execution, acknowledgment and delivery of the Lease; provided, however, foreclosure of the Deed of Trust shall not, as provided below, extinguish or terminate the Lease.

2. Upon foreclosure of the Deed of Trust, the purchaser of the Property may terminate the Lease. If the purchaser does not terminate the Lease, the Tenant shall remain in possession of the Property and the Tenant for itself, its successors and assigns, hereby covenants and agrees with the Lender, its successors and assigns, to make full and complete attornment: (a) to the Lender, its successors or assigns in the event of the exercise of the right to collect rent under the Deed of Trust; and (b) to the Lender, its successors or assigns or to the purchaser or grantee otherwise of the Property, as the case may be, in the event of a foreclosure sale under the Deed of Trust or of a conveyance thereof in lieu of foreclosure or in extinguishment of the indebtedness secured thereby, such attornment to be for the balance of the term of the Lease, including, without limitation, any extension now provided there under, if so extended, and shall be upon the same terms, covenants and conditions as provided in the Lease so as to establish a direct privity of estate and contract between the Tenant and such other party aforesaid, with the same force and effect as though the Lease were originally made directly between such party, to whom the Tenant shall attorn aforesaid, and the Tenant, except that no such party to whom the Tenant shall attorn aforesaid shall be liable for any then existing default on the part of the Landlord under the Lease, and the Tenant shall have no right to assert any such default or claim for any damages arising there from as an offset against rent accruing thereafter.

3. The term "Lease" as used herein shall be deemed to be the Lease as originally executed by the Landlord and the Tenant and as the same may be amended or modified by written agreements hereafter made, from time to time, by and between the Landlord and the Tenant and their respective successors and assigns; provided, however, the Tenant and the Landlord agree not to amend or modify the Lease without the Lender's prior written consent and that no amendment or modification of the Lease will be effective without the Lender's prior written consent.

4. All of the terms, covenants, and conditions herein shall run with the land and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

5. The term "assign" as used herein shall be deemed to include, but shall not be limited to, any other party hereafter acquiring the estate in the Property of any party hereto or any interest therein.

6. The execution of this Agreement by the parties hereto shall not constitute a waiver of any rights of such parties under the Lease.

7. This Agreement shall be governed by the laws of the State of . This Agreement may be executed in several counterparts, each of which shall constitute an original but which when taken together shall constitute one instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

LENDER

Name:

By:

Its (Vice) President

TENANT

Name:

By:

Its (Vice) President

LANDLORD

Name:

By:

Its (Vice) President

STATE OF

COUNTY OF

Personally appeared before me, the undersigned authority in and for the said County and State, on this day of , , within my jurisdiction, the within named , who acknowledged [he] [she] executed the above and foregoing instrument.

_____________________________

NOTARY PUBLIC

My Commission Expires:

STATE OF

COUNTY OF

Personally appeared before me, the undersigned authority in and for said County and State, on this day of , , within my jurisdiction, the within named , who acknowledged [he] [she] is of , a corporation, and that for and on behalf said corporation, as its act and deed [he] [she] executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do.

_____________________________

NOTARY PUBLIC

My Commission Expires:

STATE OF

COUNTY OF

Personally appeared before me, the undersigned authority in and for said County and State, on this day of , , within my jurisdiction, the within named , who acknowledged [he] [she] is of , a corporation, and that for and on behalf said corporation, as its act and deed [he] [she] executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do.

___________________________

NOTARY PUBLIC

My Commission Expires:

EXHIBIT A

Legal Description

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What a Subordination and Attornment Agreement Is

A Subordination and Attornment Agreement is a legal instrument used in real estate and secured lending to change the relative priority of liens or to confirm a tenant’s recognition of a new landlord or lender in control of property. It typically combines two linked promises: a subordination where one party agrees that its existing claim or lien will yield priority to another party’s interest, and an attornment where a tenant or obligee agrees to acknowledge and accept a new party as landlord or secured party. The document clarifies rights, remedies, and effective dates to avoid disputes over priority and possession.

Why This Agreement Matters for Priority and Possession

It creates a clear legal record that protects lenders’ security interests and tenants’ rights by fixing lien priority and confirming who the tenant will recognize as landlord after a sale, foreclosure, or refinancing.

Why This Agreement Matters for Priority and Possession

Who Normally Signs or Relies on This Agreement

Typical parties include landlords, tenants, lenders, and purchasers; each party’s role is different but mutually relevant for lien priority and occupancy rights.

  • Lenders and mortgagees seeking to preserve or obtain lien priority while allowing existing leases to remain in effect.
  • Landlords or property owners who must confirm tenant obligations after refinancing or sale.
  • Tenants who need assurance their lease will continue under a new lender or owner.

The agreement reduces litigation risk by documenting priorities and post-transfer tenancy relationships ahead of title transfers or loan closings.

Representative Signers and Authorized Roles

Lender / Secured Creditor

Chief legal or loan officer who holds authority to accept subordinate interests or require attornment; signs to confirm priority changes and may require board or loan committee approval before execution.

Tenant / Authorized Agent

Property occupant or an authorized representative who attorns to a new landlord; must have authority under lease terms and sign acknowledging continued performance obligations and where rent should be paid following a transfer.

Core Elements Included in a Professional Agreement

A well-drafted Subordination and Attornment Agreement balances priority clauses, consent language, effective dates, and remedies to ensure all parties understand rights and obligations.

Subordination Clause

Explicit language stating which lien or interest is subordinate, the scope of subordinated rights, and any conditions or exceptions to the subordination.

Attornment Clause

Tenant acknowledgement that it will recognize a new landlord or secured party and continue performance under existing lease terms unless expressly modified.

Effective Date

Specifies when the subordination and attornment take effect, often tied to closing, recording, or a triggering event such as a foreclosure sale.

Priority Statement

Defines lien ranking relative to other recorded instruments and may reference recording instruments or loan documents by date and recording information.

Cure and Remedies

Sets out rights to notice, opportunity to cure defaults, enforcement measures, and which remedies survive termination or transfer.

Governing Law

Identifies the state law that governs interpretation and enforcement, frequently the state where the property is located.

How to Complete the Agreement, Step by Step

Follow this sequence to prepare, review, sign, and record the document correctly.

  • 01
    Gather Documents: Collect leases, mortgage, and recorded instruments for reference.
  • 02
    Draft Agreement: Populate parties, property, priority language, and effective date.
  • 03
    Review with Counsel: Have lender and tenant counsel confirm language and authority.
  • 04
    Execute and Record: Sign, notarize, then record if required to preserve priority.

Where the Agreement Fits in a Typical Transaction

The agreement is executed alongside loan closings or title transfers and may be recorded to provide public notice of changed priorities.

  • Pre-Closing Review: Title and loan counsel confirm existing encumbrances.
  • Execution: Parties sign in the order required by loan documents.
  • Notarization: Notary acknowledges signatures per state rules.
  • Recording / Notice: Record with county clerk or provide notice to tenants.

Configuring an Online Signing Workflow

Set up a digital workflow that enforces signer order, required fields, and record retention to reduce execution errors.

Field Configuration
Signer Order Lender then landlord then tenant
Required Fields Property, parties, effective date, notarization
Authentication Email plus SMS or knowledge-based auth
Audit Trail Capture timestamps, IP, and completion certificate

Digital Signing and Technical Requirements

Use an eSignature platform that supports ordered signing, notarization workflows, secure storage, and a detailed audit trail.

  • File Formats: PDF, DOCX supported
  • Integrations: Title systems, CRM, cloud storage
  • Security: TLS in transit; AES-256 at rest

Ensure the platform can attach a certificate of completion, store notarized copies, and meet any industry compliance such as a BAA for healthcare-adjacent workflows.

Common Legal Risks and Consequences

Loss of Priority: Improper or unrecorded subordination may forfeit expected lien priority.
Invalid Attornment: Defective attornment language can leave tenant obligations unclear.
Recording Defect: Missing acknowledgements can prevent county recording.
Enforcement Issues: Ambiguities increase litigation and collection costs.
Contractual Breach: Conflicting clauses may trigger loan defaults or cure obligations.
Title Problems: Inaccurate references can create clouded title requiring quiet title actions.

Frequent Preparation Errors to Avoid

  • Using informal property descriptions rather than the recorded legal description leads to recording rejection or ambiguity.
  • Failing to confirm that the signer has corporate authority or a board resolution to bind an entity creates enforceability risk.
  • Not tying the effective date to the closing or triggering event can create gaps in priority between documents.
  • Omitting recording or failing to provide notice to tenants leaves public records inconsistent with private agreements.

Real-World Use Cases and Outcomes

Two concise examples show typical transactions where the agreement resolved priority or tenancy issues quickly.

Commercial Refinance

A lender required subordination to take first priority on refinancing older debts

  • Tenant attorned to the lender to ensure uninterrupted occupancy
  • The recorded agreement prevented a later title dispute and allowed the refinance to close on schedule, preserving rental income streams.

Loan Default Sale

A bank foreclosed and purchased property at sale, prompting tenants to question whom to pay

  • An attornment confirmed landlord status and rent direction
  • With attornment in place, rent payments were properly routed, and tenant eviction risk from confusion was avoided.

eSignature Vendor Comparison for Executing This Agreement

Platform choice affects authentication, bulk execution, audit trails, and cost; signNow is listed first for easy comparison.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes Yes
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently Asked Questions About These Agreements

Answers address enforceability, eSignature use, notarization, revocation, and practical next steps for common problems.


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