English tenses

THE BENEFITS OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS

THE BENEFITS OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENTS

By Joseph Grignano and Iris Tam, Blake, Cassels & Graydon LLP

...and its Real Estate Practice Group

Overview
Lease Priority
Attornment
Prior Lease
Subordination
Non-Disturbance
Sample Agreements
Additional Resources

Rate this QuickCounsel

OVERVIEW

In entering into a new lease and establishing its premises at a new location, a tenant will likely have invested a considerable amount of money in its premises for leasehold improvements and will very often view its new business location as critical to its operations. In uncertain economic times, if the tenant’s landlord defaults under its obligations to its mortgage lender, depending upon the relative priorities between the tenant’s lease and the lender’s mortgage, the tenant may risk being evicted and suffering significant disruption to its operations and financial loss, even though the tenant has not defaulted in its obligations contained in its lease. From the tenant’s point of view, this hardly seems fair, but this is exactly what can happen where the lease is subordinate to the mortgage and the lender elects to enforce security following a loan default by the landlord.