Multi-unit commercial real estate properties, like residential apartments and office buildings, can be some of the most complex types of commercial real estate buildings for lenders to manage and foreclose. This is due to these types of buildings necessarily operating under many lienholders. SNDAs are often used in mortgage agreements to establish the relationship between the lien holders. Attornment agreements, present in SNDAs, may lead to confusion for lenders, especially if they are enacting their first foreclosure.
The team at Total Lender Solutions has helped hundreds of lenders complete commercial real estate foreclosures across seven states for over fifteen years. When clients come to us, one of the most common complicating factors is multiple lien holders and interested parties. The specifics of a lender’s attornment agreement are going to help lenders determine how to move forward with foreclosure.
What is an Attornment Agreement?
Attornment is the act of transferring something to someone else. In property law, it is what happens when ownership of a property is transferred, either through a normal sale or through foreclosure.
An attornment agreement is an agreement between the lender and the tenant and stipulates that if the property changes hands in the middle of the lease, the tenant agrees to continue to uphold the contract until the end of the lease. The new owner gains all the rights and responsibilities of the old owner, and cannot change their rights unless a new lease is signed by the tenant.
What Should Lenders Know About Attornment Agreements when Foreclosing Commercial Property?
The process of foreclosing a property with multiple lien holders is, legally, much the same as foreclosing a property with a single lien holder. However, lenders should be prepared to locate and present all contracts and formal agreements when preparing to foreclose on a piece of real estate due to a delinquent borrower.
Often, gathering and organizing these contracts and ensuring that your organization is adhering to all of the guardrails established by an attornment agreement is time-consuming and arduous, especially for lenders who do not have the internal resource to allocate to the foreclosure process.
“Because of the complexity of some projects, we’ve created flow charts and profiles for each contract so that lenders can easily review the properties and report back to compliance. We’ve worked hand-in-hand with lenders to conduct a deep dive review of property agreements.”
— Randy Newman, CEO, Total Lender Solutions
The foreclosure team at Total Lenders Solutions has years of experience managing even the most complex foreclosures, with results for multi-million dollar deeds of trusts. Let our team manage your asset recovery so you can focus on your customers.
Top Foreclosure Company for California, Texas, Missouri, Oregon, Nevada, Washington, and Arizona
Hiring a reputable foreclosure company, like Total Lender Solutions, can make a significant difference for your business. Our expertise and experience can create a personalized solution for you, guiding you to a favorable outcome.
If you’re currently dealing with foreclosure, don’t hesitate to contact our team by filling out our contact form.
