What to Do if Tenant Not Required to Provide SNDA?
Hey Guys,

I'm in escrow to sell a fast food restaurant that I own in the South. Running into a bit of an issue as the buyer's lender is requiring a SNDA to close, but the tenant is refusing to provide one. As per the lease, they only have to provide an estoppel upon request from the landlord. Has anyone ever run into this issue before? If so, how did you appease the lender?
[{"id": "hi9ej9v", "text": "Oooo I like this one. My experience points to the deal falling through without this required document. Any reason why tenant refuses? This is interesting because the SNDA assures the rights of all parties are upheld. Without it the financing company cannot establish privity through loan docs.", "replies": [{"id": "hia0g2u", "text": "The tenant is a large franchisee of a national chain (over 100 units). Prior to my purchase of the property, he was trying to force the old landlord to sell the property to him at a lowball price, by claiming he was going out of business and needed a large rent reduction. His P&amp;Ls told a different story. This franchisee has a reputation of beating up his landlords to sell their property to him and then flipping out by doing a 15 year sale leaseback. I suspect that was also his game plan on my location. When I purchased the property, he refused to give the prior landlord an estoppel and did not produce one until legal action was threatened.", "replies": [{"id": "hia449r", "text": "If you can't tell by now he's trying to pull the same play on you. I like to go scorched Earth on these guys and send a lawyer immediately. Otherwise he holds the key to your success in this deal.", "replies": [{"id": "hia5fyx", "text": "just sent them a notice of our intent to file suit today if they don\u2019t provide an estoppel for new buyer", "replies": [{"id": "hia7kd3", "text": "Should clear things right up.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hi9faka", "text": "If existing owner has an SNDA with their lender, maybe the buyer's lender might accept that instead.\n\nIf the TT is a major chain, the lender may have an already acceptable form the TT can sign off on. \n\nWhen has a lender ever exercised provisions in the SNDA?  \n\nUsually all of the SNDA provisions are addressed in one form or another in a typical lease.  Landlords will typical 'endeavor' or use 'good faith efforts' to deliver a signed SNDA to lender.\n\n[Check out pgs 753, 755 and 767 of this article.  You might be able to use arguments in this article to persuade TT and lender.](https://www.real-estate-law.com/PDF/Needless_Disturbances_47_47.pdf)", "replies": [{"id": "hi9rsma", "text": "Also in  my experience over years - pretty much every closing I have - mainly as a buyer - I never complete the 'requested' Estoppel and SNDA by closing date.  Bank funds and I close anyway, but then the bank still comes at me for these docs well past closing.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hia55uv", "text": "Start looking for ways to evict the tenant.  \nOffer to seller finance to the buyer, that can buy you some time.\n\nIf you have financing, what's the maturity date on the note? Which came first, your mortgage or the lease?\n\nIf push comes to shove and your lender forecloses, then it is possible that the tenant's lease is wiped out.", "replies": [{"id": "hiaf5qf", "text": "We can't evict the tenant. They have a long term NNN lease in place, and give the property value (despite their sketchy business practices).", "replies": [{"id": "hiaiaq7", "text": "Based on your original post and your comment about the tenant trying to force the prior landlord (and now you!) to sell to him at a lowball price, it doesn't matter what the value of the property is with that tenant in place because that tenant is making it exceedingly difficult for you to exit the property other than to him at his lowball price. 12+ months of vacancy or the higher cap rate is worth it to remove the problem.\n\nHow many pages is your NNN lease? If you're threatening legal action anyways (per your comment elsewhere), you should have your lawyer looking through the lease for any potential violations.\n\nUnless he has been adhering very closely to the lease, you can likely get him out on some technicality or other.", "replies": [], "depth": 3}], "depth": 2}, {"id": "hiaf8ge", "text": "Seller financing may be a good idea here to get it over the finish line", "replies": [], "depth": 2}], "depth": 1}, {"id": "hic2ul2", "text": "I\u2019m assuming lease says Tenant is not automatically subordinate to any future mortgage?  Sometimes no one checks \u2014 if it\u2019s auto subordinate then no SNDA needed", "replies": [{"id": "hicxvja", "text": "Let me double check this language and update you later. Great thinking.", "replies": [], "depth": 2}], "depth": 1}]