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Lease Subordination Agreement
1. Parties. Agreement among [name], a [state] corporation having an office at [address] (Owner), [name], a [state] corporation having an office at [address] (Tenant), and [name], a [state] corporation having an office at [address] (Lender).
2. The Lease. Tenant has executed a lease of a portion of the building located at [address] (which property is more particularly described in Exhibit A [omitted]) (Property). Such lease was executed with Owner and is dated [date] (Lease).
3. The Mortgage. Owner is about to execute a mortgage of the Property in favor of Lender. Such mortgage is dated [date], secures a sum of ---------- dollars ($----------) and is to be recorded in the records, County Clerk of [county, state] (Mortgage).
4. Subordination. In consideration of the loan to be made by Lender to Owner and for other good and valuable consideration to the parties, as contained in this Agreement, Tenant and Owner agree that the Lease, and all rights under the Lease, are subject and subordinate to the lien of the Mortgage (including all extensions and modifications of the Mortgage). This provision is self-operative, but Tenant will deliver any additional instruments required of Tenant to effect such subordination.
5. Attornment. If Lender, or a purchaser on foreclosure, succeeds to Owner's interest in the Property and, at such time, the Lease is in full force, then Tenant will promptly, on request, attorn to Lender or to such purchaser.
6. Nondisturbance. If Tenant is not in default under the lease or the terms of this Agreement, then Lender will not
(a) name or join Tenant as a party defendant in any action to foreclose the Mortgage or otherwise act to extinguish the Lease or Tenant's interest under the Lease or
(b) disturb Tenant's possession under the Lease. Tenant's rights under the Lease shall not be disturbed in any such foreclosure, and any sale in foreclosure shall be made subject to such Lease. Thereafter, the Lease shall continue as a direct lease between Tenant and Lender (or the purchaser at foreclosure). However, in that event, Lender (or purchaser) is not
(i) liable for any act or omission of any prior owner;
(ii) subject to any offsets or defenses Tenant may have against any prior owner;
(iii) bound by any rent paid by Tenant to any prior owner for more than [number] months in advance; or
(iv) bound by any modification of the Lease made without Lender's consent.
6(b). Assignment of Rents. Tenant acknowledges that Tenant has been notified that all rents and other sums payable under the Lease have been assigned by Owner to Lender, as additional security for Lender's loan to Owner. If Lender notifies Tenant of a default under the Mortgage and demands payment of such monies directly to Lender, Tenant will honor that demand.
7. Limits on Lease Activities. Without Lender's written consent, neither Owner nor Tenant will:
a. Terminate the Lease or accept a surrender of it except
(i) after default by Tenant and failure to cure or, in the case of a surrender of the Lease, prior notice of intended termination being given to Lender or
(ii) otherwise in accord with the terms of the Lease;
b. Tender or accept a prepayment of rent in excess of one month; or
c. Subordinate or permit subordination of the Lease to any lien that is subordinate to the Mortgage.
Any such action without Lender's consent is void as against Lender.
8. Notice. Any notice that Tenant is required to give to owner under the Lease shall also be given to Lender. Any rights of Tenant that are dependent on notice will take effect only after Tenant has given notice to Lender. Moreover, Lender may perform any actions required of Owner under the Lease, and Tenant will accept such performance on Owner's behalf. Lender may perform such actions on Owner's behalf within [number] days after Lender has received notice from Tenant of Owner's failure to perform. If, however, the action to be undertaken cannot reasonably be completed within [number] days, then Lender must merely have started to perform within such period and diligently pursued such performance. It is understood that Lender has the option, but not the obligation, to perform on Owner's behalf. Owner shall reimburse Lender for all expenses Lender incurs in any activities undertaken on Owner's behalf.
9. Successors and Assigns. This Agreement is binding on and will inure to the benefit of the successors and permitted assigns of the parties to this Agreement.
If Lender disposes of Lender's interest in the Mortgage, then all obligations of Lender under this Agreement shall terminate and, thereafter, shall be the sole obligation of the assignee or transferee of Lender's interest.
*** If Required By State Law ***
This Section for Notary:
State of _________
County of ________ [COUNTY]
On [DATE] before me, [NAME OF NOTARY], notary, personally appeared [NAME OF PERSON(S) INVOLVED], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
My commission expires: _____