Nondisturbance and Attornment Agreement
A Nondisturbance and Attornment Agreement is a legal document between a landlord, a tenant, and a lender that outlines the rights of the tenant in the event of a foreclosure or change of ownership regarding the property being leased.
The nondisturbance aspect ensures that the tenant’s lease will remain in effect, even if the lender takes over the property due to the landlord’s default on the mortgage. This means that the tenant can continue to occupy the premises without disruption, provided they are in compliance with the lease terms.
The attornment aspect requires the tenant to recognize the new owner of the property as their landlord, should the property change hands. This acknowledgment allows for the continuation of the lease agreement with the new owner, protecting the tenant’s rights to remain in the property under the existing lease terms.
For example, if a business rents a commercial space and the landlord fails to make mortgage payments, leading to foreclosure, a Nondisturbance and Attornment Agreement would prevent the new lender from terminating the lease as long as the tenant is adhering to its provisions. Instead, the tenant can continue to operate their business, and they must agree to recognize the lender or any subsequent buyer as their new landlord.
This type of agreement is particularly important in commercial real estate transactions, as it provides security for tenants who invest resources into their leased spaces.
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