Before you sign a real estate lease, you should fully understand all the provisions in that lease, as well as the implications of those provisions. As a result, a non-disturbance clause is a common type of lease provision with which you should familiarize yourself, particularly if you are a tenant. When you have questions or concerns about your real estate transaction or are in the midst of a real estate dispute, it is time for you to consult a top Arizona real estate lawyer at Provident Law®. Call our office today at (480) 388-3343 to schedule a real estate attorney consultation about your legal issue.
Defining the Non-Disturbance Clause
A non-disturbance clause is often part of a larger lease provision commonly called Subordination, Non-Disturbance, and Attornment provision. A non-disturbance clause generally protects tenants’ rights and gives both parties security if a change in ownership or financial circumstances occurs.
More specifically, a non-disturbance clause ensures that a tenant won’t lose their lease if the landlord fails to pay or otherwise defaults on the mortgage loan related to the property. If the default results in the lender repossessing the property, the tenant’s interests generally are protected. Therefore, in most cases, the tenant has assurances that they can continue to operate their business or otherwise utilize the property as agreed and without disruption despite the landlord’s loan default.
Benefits of a Non-Disturbance Clause
Tenants are the primary beneficiaries of a non-disturbance clause. As noted above, a non-disturbance clause guarantees them the ability to continue operating their businesses or using the real estate for the agreed-upon purposes without interruption. This assurance protects the tenant in case of a loan default and foreclosure of the property by the lender.
Furthermore, the tenant can operate knowing that the initial lease terms will remain in place instead of suddenly changing after a new owner takes possession of the property. Having certainty in lease terms allows tenants to know exactly what they have agreed to and can expect in the future in terms of housing their business.
The tenant also may be more willing to customize the space to their needs and/or make needed improvements. Since the tenant knows that they will be able to continue leasing the space, no matter the landlord’s financial condition, the tenant is more likely to keep the space well-maintained and even improve it, which benefits both them and the landlord.
Aside from protecting a tenant’s lease interest, a non-disturbance clause also benefits other parties. Leases containing this type of provision are more attractive to potential tenants. As a result, landlords are more likely to attract long-term, stable tenants because of the benefits that a non-disturbance clause provides them.
Lenders also may have less risk in loaning money to the landlord. A stable tenant can simplify property management and ensure continued profits if a default and subsequent foreclosure occurs. The lender will not have to worry about problems with the tenant developing, as the tenant will continue to enjoy the same lease terms to which they originally agreed.
Types of Real Estate Leases that May Benefit from a Non-Disturbance Clause
Commercial retail properties, such as stores and other retail businesses, can benefit from a non-disturbance clause. In most cases, commercial leases are more long-term than residential leases, so the expectation by the business owner is that they will continue to occupy the space for a minimum set term. A non-disturbance clause assures the tenant that a foreclosure on the property will not disturb their continued operations.
Other types of leases that may benefit from a non-disturbance clause include leases for office space and mixed-use properties, which are growing in popularity. Again, the continuity guaranteed by a non-disturbance clause can benefit any business or resident seeking a long-term lease without fear of an unexpected eviction.
We Are Here to Help with Your Arizona Real Estate Case
If you are interested in the benefits of a non-disturbance clause, you must ensure that your commercial lease contains this type of provision. The attorneys at Provident Law® can review your commercial leases for a non-disturbance clause and negotiate with the property owner to include such a provision in your leases. We also can tailor a non-disturbance clause to your needs and carefully document the agreement for future enforcement purposes.
Our goal is to assist you in understanding your legal rights and responsibilities concerning Arizona’s real estate law. We can help you navigate real estate transactions, and we will advocate on your behalf when disputes occur. Contact the offices of Provident Law® today at (480) 388-3343 or online and schedule an appointment to speak with the best Arizona real estate attorney about your legal matter.