Presented by: Daniel B. Myers, Esq. Wendel, Rosen, Black & Dean LLP Estoppels & SNDAs: Who, What, When, Where & Why Presented by: Daniel B. Myers, Esq. Wendel, Rosen, Black & Dean LLP

INTRODUCTION Purpose and importance of Estoppels and SNDAs Relevant lease provisions Key issues in negotiating Estoppels and SNDAs Practical advice in responding

PURPOSE AND IMPORTANCE Estoppels Intended to report on status of lease (factual matters and lease terms) to prospective purchasers and lenders Lease provisions can require both Landlords and Tenants to provide Estoppels

PURPOSE AND IMPORTANCE (continued) Subordination, Non-disturbance and Attornment Agreement (SNDA) Lease (particularly if a memorandum of lease is recorded) gives Tenant priority vis-à-vis subsequent financing Subordination: Agreement between Landlord’s Lender and Tenant that the lease will be subordinate (i.e., junior) to Lender’s mortgage

PURPOSE AND IMPORTANCE (continued) Subordination, Non-disturbance and Attornment Agreement (SNDA) Non-disturbance: Agreement by Landlord’s Lender to not disturb Tenant and to recognize Tenant’s lease in the event of a foreclosure by Lender. Attornment: Agreement by Tenant to recognize the Lender or the buyer at foreclosure as the “Landlord” under the lease with the same terms and conditions existing under the lease.

LEASE PROVISIONS Estoppels Timing Effect of delays or failure to respond Reimbursement? Attach form of estoppel certificate?

LEASE PROVISIONS SNDAs Automatic subordination (current/future) and non- disturbance protection Timing and effects of delays or failure to respond Attach form of SNDA? Do you run title? Contingency to provide SNDA for existing financing

ESTOPPEL LEGAL ISSUES Binding Effect – Plaza Freeway case in CA (estoppel can bind signatory and prevent from taking different position at later date) Addressee Factual Statements “To actual knowledge” qualifier

ESTOPPEL LEGAL ISSUES (continued) Delete compliance with laws/hazardous materials provisions Avoid waiving potential exclusive use, prohibited uses and co-tenancy violations Watch for/remove SNDA-type provisions & prohibitions/requirements in Estoppels Savings language to try to avoid binding effect

SNDA LEGAL ISSUES Subordinate to “lien” of deed of trust – not provisions of deed of trust Non-disturbance and attornment language Prohibitions on assignment, subletting, amendments, prepaid rent, etc.

SNDA LEGAL ISSUES (Continued) Lender subject to: Defaults Offsets (Important if Tenant Improvement Allowance or self-help rights) Security Deposit/Prepaid Rent Amendments Landlord construction and Tenant Improvement Allowance obligations

SNDA LEGAL ISSUES (Continued) Lender notice and cure rights Casualty/condemnation proceeds Exculpation of liability

SNDA LEGAL ISSUES (Continued) Hazardous Materials provisions Estoppel language in SNDAs Interpretation language Jurisdiction

PRACTICAL ADVICE Don’t forget about SNDA and Estoppel provisions during lease negotiations Try to avoid serial Landlord requests for Estoppels – instead intended for lenders and purchasers When are SNDAs required/not required? Create process to respond to Estoppel/SNDA requests Always confirm response times set forth in lease Forms attached to lease – Does this work?

PRACTICAL ADVICE (Continued) Reimbursement of costs for responding to Estoppels/SNDAs – Does this work? Goodwill with Landlord Bargaining leverage for other issues Work to resolve issues directly with Lender When to involve/not to involve Landlord

Questions?

THANK YOU Daniel B. Myers, Esq. Wendel, Rosen, Black & Dean LLP dmyers@wendel.com