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The Effect of SNDAs in Commercial Leases at a Foreclosure Sale

A tenant’s rights and obligations after foreclosure will depend on whether the lease had priority over the deed of trust (“DOT”) or mortgage in foreclosure. (See RNT Holdings, LLC v. United General Title Insurance Company, 230 Cal. App. 4th 1289 (2d Dist. 2014).) Ordinarily, when a DOT or mortgage has priority over a subsequent lease, the lease is terminated by the foreclosure of the DOT. Thus, the tenant would no longer have a right to possession. However, a lease that is recorded prior to the DOT has priority over that DOT and will normally be unaffected in the event that the DOT is foreclosed on. The result is that the purchaser from a foreclosure sale will have title that is subject to the lease. (See

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Posted in Commercial Lease, Foreclosure, Leases

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