SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement (this "Agreement") is made at __________ on __________.
BETWEEN
__________, __________, of __________ (the "Tenant");
AND
__________, __________, of __________ (the "Landlord");
AND
__________, __________, of __________ (the "Lender").
The Tenant, the Landlord and the Lender are each a "Party" and together the "Parties".
RECITALS
A. The Tenant is in occupation of __________, __________, in __________ (the "Premises") under the Lease identified in Clause 1, of which the Landlord is landlord.
C. The Lender has asked for, and the Landlord and the Tenant have agreed to give, this Agreement as to the priority of the Lease against the Mortgage, the continuity of the Tenant's possession if the Lender ever enforces the Mortgage, and the Tenant's attornment to whoever acquires the Premises through that enforcement, on the terms below.
D. This Agreement does not restate, and is not a substitute for, the Tenant Estoppel Certificate this library provides for a Tenant's own certification of the state of a lease to a buyer or lender, or for the Tenant Attornment Letter this library provides for the ordinary sale of a tenanted property with no financing involved — Clause 11 says more about this. Nor is it the Mortgage itself, or the Lease itself; each of those remains its own instrument, on its own terms, and this Agreement does not vary either of them except as this Agreement expressly says.
NOW THIS AGREEMENT WITNESSES as follows.
1. THE LEASE
1.2 The Tenant confirms that the particulars of the Lease stated in Clause 1.1 are true and correct as at the date of this Agreement, to the best of the Tenant's knowledge.
2. THE MORTGAGE
3. SUBORDINATION
3.1 The Tenant's rights, title and interest under the Lease, and the Tenant's right to possession of the Premises under it, are made, and shall at all times remain, subordinate and subject in priority to the Mortgage and to the Lender's rights under it, to the same extent as if the Mortgage had been created before the Lease.
3.2 The subordination in Clause 3.1 does not itself terminate, suspend or otherwise affect the Lease or the Tenant's possession under it while the Lease continues on its ordinary terms — it only fixes the ORDER OF PRIORITY between the Lease and the Mortgage if that order ever actually matters, which is principally on an enforcement of the Mortgage under Clause 4.
4. NON-DISTURBANCE
4.1 So long as the Tenant is not in default under the Lease beyond the cure period stated in Clause 4.2, the Lender shall not, in exercising any right under the Mortgage — including taking possession of the Premises, appointing a receiver, selling the Premises, or otherwise enforcing the Mortgage — terminate the Lease, disturb the Tenant's possession of the Premises, or join the Tenant as a party to any proceeding for possession of the Premises, and the Lease shall continue in full force between the Tenant and whoever for the time being holds the Landlord's interest in the Premises.
4.3 Nothing in this Clause 4 requires the Lender to perform any obligation of the Landlord under the Lease unless and until the Lender, or a purchaser through its enforcement of the Mortgage, actually becomes the owner of the Premises in the Landlord's place — see Clause 7.
5. ATTORNMENT
5.1 If the Lender, or any person who acquires the Premises through the Lender's enforcement of the Mortgage, becomes entitled to the Landlord's interest in the Premises in place of the Landlord, the Tenant shall attorn to, and recognise, that person as its landlord under the Lease, and shall thereafter pay Rent and perform every other obligation of the tenant under the Lease to that person, automatically and without a fresh lease, tenancy agreement or further act by either the Tenant or that person being needed to bring the attornment about.
5.2 The attornment in Clause 5.1 is on the Lease exactly as it stands, and on no other or different terms; Clause 9 says more about this.
6. RENT REDIRECTION ON DEFAULT NOTICE
6.3 The Tenant shall comply with a notice under Clause 6.1 once given, and a payment of Rent made to the Lender in accordance with it discharges the Tenant's obligation to pay that Rent under the Lease, to the same extent as if it had been paid to the Landlord. The Tenant incurs no liability to the Landlord for having complied with a notice given under Clause 6.1 that appeared valid on its face.
6.4 A notice under Clause 6.1 does not itself make the Lender the Tenant's landlord, and does not by itself trigger the attornment in Clause 5 — that happens only once the Lender or a purchaser through it actually acquires the Landlord's interest in the Premises, which may be before, at the same time as, or after a notice is given under this Clause 6.
7. THE LENDER'S OBLIGATIONS BEGIN ONLY ON BECOMING OWNER
7.1 The Lender assumes no obligation of the Landlord under the Lease, and is not liable to the Tenant for any default or omission of the Landlord, whether arising before or after the date of this Agreement, unless and until the Lender, or a purchaser through its enforcement of the Mortgage, actually becomes the owner of the Premises in the Landlord's place. From that date, the obligations of the landlord under the Lease bind the Lender or that purchaser prospectively, and not for anything that occurred, or ought to have occurred, before that date.
8. LIMITATION OF LIABILITY AFTER BECOMING LANDLORD
8.1 If the Lender, or a purchaser through its enforcement of the Mortgage, becomes the Tenant's landlord under Clause 5, its liability to the Tenant under the Lease from that date is limited to its interest, from time to time, in the Premises, and the Tenant shall look only to that interest, and not to any other asset of the Lender or that purchaser, for the satisfaction of any claim under the Lease arising after that date.
9. THE LEASE OTHERWISE CONTINUES UNCHANGED
9.1 Apart from the subordination in Clause 3, the non-disturbance in Clause 4, the attornment in Clause 5 and the rent redirection in Clause 6, nothing in this Agreement amends, waives, supersedes or varies any term of the Lease. The Rent, the term, the permitted use and every other term of the Lease continue exactly as they were, and neither the Lender nor a purchaser through its enforcement of the Mortgage may use this Agreement, or its position as the Tenant's new landlord under Clause 5, as an occasion to renegotiate the Lease.
10. TERM OF THIS AGREEMENT
10.1 This Agreement takes effect on the date of this Agreement and continues for as long as both the Lease and the Mortgage remain in force, and ends, without any further act, on whichever of the Lease or the Mortgage first comes to an end — except that Clause 5 (Attornment), once it has actually operated to make the Lender or a purchaser through it the Tenant's landlord, and Clause 8 (Limitation of Liability), continue to bind the Parties for as long as the Lease, as so attorned, itself continues.
11. WHAT THIS AGREEMENT DOES NOT DO
11.1 This Agreement does not create, perfect, extend, vary or discharge the Mortgage — that is done by the mortgage or hypothecation documentation between the Landlord and the Lender, on its own terms, separately stamped and registered as that documentation requires.
11.2 This Agreement does not create, renew, extend or otherwise vary the Lease, except to the extent Clauses 3 to 6 expressly say so, and does not itself transfer any right, title or interest in the Premises.
11.3 This Agreement is not the Tenant Estoppel Certificate referred to in Recital D, and does not contain the Tenant's certifications as to rent arrears, the security deposit, the Landlord's performance of the Lease, or notice of any other encumbrance — where the Lender or a buyer wants those certifications, they are given separately, on that Certificate, and this Agreement's confirmation in Clause 1.2 is limited to the Lease particulars stated in Clause 1.1 and goes no further.
11.4 This Agreement is not the Tenant Attornment Letter referred to in Recital D, which this library provides for an ordinary sale of a tenanted property with no lender involved, signed by an outgoing and incoming landlord and addressed to the tenant. Clause 5 of this Agreement performs a similar function for attornment specifically to the Lender or a purchaser through its enforcement of the Mortgage, and is not to be read as achieving, or as a shortcut to, whatever a sale of the Premises to an ordinary buyer would separately require.
12. STAMP DUTY AND REGISTRATION
12.1 The Parties should have the stamping position for this Agreement — including whether it is chargeable at all, and if so under which article — confirmed with the Collector of Stamps or a licensed stamp vendor before it is relied on in evidence, for the reasons given in the Stamping note above; this Agreement does not state a rupee figure for it, and none should be assumed from its silence.
12.3 Nothing in this Clause 12 affects the stamp duty or registration position of the Mortgage or of the Lease, each of which is governed by its own instrument and not by this Agreement.
13. NOTICES
13.1 A notice under this Agreement shall be in writing and delivered by hand against acknowledgement, or sent by registered post, reputed courier or email, to the Tenant at __________, to the Landlord at __________, and to the Lender at __________, or such other address any of them notifies in writing.
14. GOVERNING LAW AND JURISDICTION
14.1 This Agreement is governed by the laws of India.
15. GENERAL
15.1 This Agreement is the entire agreement between the Parties as to the matters in Clauses 3 to 6, and supersedes every prior discussion between them about those matters.
15.2 No amendment to this Agreement is effective unless made in writing and signed by all three Parties.
15.3 A failure or delay by a Party in enforcing this Agreement is not a waiver of it.
15.4 If a provision of this Agreement is held invalid or unenforceable, the rest of it continues in effect.
SCHEDULE — PARTICULARS
SIGNED BY THE TENANT
__________
Signature: ______________________________
Date: __________
SIGNED BY THE LANDLORD
__________
Signature: ______________________________
Date: __________
SIGNED BY THE LENDER
__________
Signature: ______________________________
Date: __________
WITNESSES