Legal Alert - Lenders Can Prepare for Tenant Offset Rights in SNDAs
by Stephen J. Young
Tenants’ limited recourse to their landlords has made “offset rights” a major issue in negotiating Subordination, Non-Disturbance and Attornment Agreements (SNDAs).
Tenant offset rights arise when the tenant has the right to deduct from its future rent obligations money the landlord owes the tenant. Tenant offset rights arise two ways. When the landlord fails to pay money it owes the tenant, such as a tenant improvement reimbursement, the tenant may be given an express offset right. If the landlord fails to perform other obligations under the lease, such as maintaining the parking lot, and the tenant performs that obligation at its own expense, the tenant may also be given an express offset right.