You've signed the lease and moved
into your new space. You have received an excellent deal,
of course, but the move was still expensive. Upgraded tenant
improvements, moving expenses, lost productivity-- all these
items take their toll in time, money, and energy. At least
you will not have to move again for ten years.
Or will you?
Unfortunately, many tenants neglect to obtain the one thing
that will protect their lease if their landlord gets into
financial trouble: a non-disturbance and attornment agreement.
This is a short agreement signed by the project's lender saying
that the lender will honor your lease if it forecloses its
mortgage. This is the "non-disturbance" part of
the agreement. The tenant agrees, in return, to accept the
lender as the landlord and to pay the rent directly to him.
This is the "attornment" part of the agreement.
Without such an agreement, the lender does not have to honor
your lease if he forecloses. This is because the lender's
encumbrance existed prior to your lease, and when the lender
forecloses, all junior interests, including your lease, are
A similar situation occurs when the project is on a long-term
ground lease. If the ground lease is terminated, your lease
also terminates unless you have a non-disturbance agreement.
After a foreclosure or ground lease termination occurs, the
lender or lessor may offer you a new lease to let you stay
on the same terms. Or, he may demand more rent, or may even
force you to leave if he has other plans for the space. The
choice is up to him, and he can be expected to act for his
own advantage, not yours.
Therefore, if you are leasing space--whether it is an office,
store, warehouse, or industrial space--always require the
landlord to deliver to you a non-disturbance and attornment
agreement executed by the project's lender or ground lessor.
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