What does a subordination provision look like?
While the terms of an SNDA will undoubtedly depend upon the operator’s and owner’s relative sophistication and bargaining strength, a typical hotel management agreement is likely to have something like the following provision: Subordination. Owner shall ensure that all existing and future Mortgagees and lessors provide Operator with non-disturbance agreements in form and content reasonably acceptable to Operator, which agreements shall preclude the termination of this Agreement absent the uncured breach of this Agreement by Operator, and shall further preclude the conveyance or leasing of the Hotel (whether on foreclosure, deed in lieu thereof or otherwise) to any Person to which Owner could not assign this Agreement without Operator’s consent. As an Owner or Lender, do you know why the SNDA so important? As one critical part of a long-term hotel management agreement that may govern the parties’ rights and liabilities for decades, the SNDA controls how each party’s interests will be se
