Non-Disturbance Clause Key in Soft Market

February 5, 2009
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Almost all leases state that the lease is subordinate to any present or future liens on the property. So, if the lender decides to foreclose on the property, it would technically have the right to terminate all existing leases and evict the tenants.

In a soft market, where the possibility of a property owner defaulting on its loan is likely, you should demand that your owner get a non-disturbance agreement from its lender. The non-disturbance agreement will protect you from eviction as long as you don’t default on your lease.

If you can’t get your owner to secure a non-disturbance agreement, at least require the owner to give you a written guarantee that it has not received a notice of default from its lender. That won’t necessarily protect you from future defaults but it will let you know that your owner is in good standing with its lender.