We all understand the physical and cultural importance of music. But the interconnectivity of legal documents in our financial system is equally profound. Provisions in legal agreements can prevent verbal or physical disruption from taking place. No matter how far we have come as a society, unexpected disruptions are bound to happen; that’s life. A problem that usually occurs during the lifespan of a leasehold estate agreement is confusion among artists and record labels as to the rights and roles each parties play during the duration of a contract or agreement. To avoid bad blood, artists and representatives should recognize the need for legal contracts that protect their interests.
The physical and cultural importance of music has instantaneously broken new ground and crossed cultural boundaries. The significance of music can be seen and felt across all demographic groups from urban to rural communities. The industry itself is very important to the nation’s economic and social infrastructure. From famous recording companies to wannabe rapper-turned CEO businesses, the musical aspirations of many can be linked to a single moment or chain of events that align. The unpredictability of the music industry is perhaps the most difficult characteristic to grasp. By definition, the existence of an industry that demands normalcy to thrive, yet exemplifies volatility by its very nature is hard to visualize. Although the overall soundness of music’s contribution to society cannot be denied, the safety of one’s property and resources in today’s market is an entirely different story.
The acronym SNDA (?) will forever be associated with your idea of a sage legal document. SNDA is a clause typically included in commercial real estate leases. SNDA clauses generally create a subordination between a recorded act and all subsequent deeds, leases, and/or mortgage agreements. A subordination, non disturbance and attornment agreement is a lessor’s best friend, especially when another lessor (usually a landowner) appears before a tenant with a recording of a deed, lease, mineral lease or mortgage. The latter waterfall of recorded leasing acts creates the conundrum whereby the landlord/seller has the right to disturb the sublease and initiate a conditional action to all parties listed in the property deed. This provision puts a strangle hold on artists, regardless of self-perceived creative genius. Art is subjective, but money is not.
In the music business, one can expect a high degree of competition; even in the most supportive environments. An artist’s subordination, non disturbance and attornment agreement enables him or her to focus on creative endeavors with as little outside interference as possible. In the unlikely event that a ‘disturbance’ occurs, the parties (lessor/lessee) can refer to the agreement. A non-disturbance agreement will help resolve strife between lessors and tenants, that would otherwise disrupt the typical collective process of creation.
In an effort to find safety from competitive predators that seem to have it all, artists sometimes agree to relinquish their creative identity in favor of their new significant other-new record label executives. On the surface, this arrangement appears to be ideal for all interest parties heading into the summer of ’99. However, in practice, an artist contractual arrangement can quickly revert to a reverse auction if care and caution is not given. A group of predators is outrageously larger than the everyday predatory duo. Predators often come in packs like wolves. Under circumstances which seem to favor an artist, the musicians must not violate backlash producer protocols themselves. That means avoiding hostile and barely legal language that could alienate entrepreneurial opportunists.
A SNDA is comparable to a record label: Attornment: attornment can be compared to an artist’s resale contract to a new label. Each artist must be cognizant of his or her obligations to/in exchange for a larger compensation package or payout. A similar concept exists with an attornment clause in a SNDA agreement. Non-disturbance: a non-disturbance clause protects lessee from an eviction order signed by the lessor, even after a sale to a new owner. A record deal that gives an artist full control and access (24/7) to studio time is an example of a non-disturbance clause. The problem with a non-disturbance clause occurs only when the lessor sells the property to a third party on the same and/or superior priority level as the original lease agreement.
In the event an artist or independent record label enters into a lease directly or via a third party sublease, the artist should seek legal advice from an attorney with experience negotiating and drafting SNDA agreements. If in-house counsel is available, the lawyer should be admitted to state bar associations in all jurisdictions involved in the disclosure of terms and binding effect of a SNDA agreement. SNDA agreements including subordination, non-disturbance and attornment clauses will prevent communication breakdowns that lead to legal disputes with lessors and sublessors. While the courts recognize the legal rights of lessor in the context of commercial leasing arrangements, the courts are equally protective of tenant capital or property. Therefore, artists and individuals who utilize leased space to develop ideas can make efforts to mitigate legal liability and occupational hazards.
