Texas Real Estate Sales Agent ExamContractsHard
A commercial tenant's lease agreement includes a clause stating that if the landlord sells the property during the lease term, the new owner must honor the existing lease terms and cannot evict the tenant simply due to the change in ownership. This clause is a common example of what?
- AA subordination clause
- BAn estoppel certificate
- CAn attornment clause
- DA non-disturbance clause
Show answer & explanationAnswer & explanation
Correct answer: D. A non-disturbance clause
A non-disturbance clause in a lease protects the tenant's right to remain in possession of the premises under the existing lease, even if the property is foreclosed upon or sold to a new owner, provided the tenant is not in default.
Why the other options are wrong
- A. A subordination clause changes the priority of rights, typically making a lease junior to a mortgage, which could allow eviction.
- B. An estoppel certificate is a document signed by the tenant verifying the lease terms and status, often requested by buyers or lenders.
- C. An attornment clause obligates the tenant to recognize a new owner (e.g., a lender in foreclosure) as their new landlord.
Non-Disturbance Clause
A provision in a lease or a separate agreement between a tenant and a lender that guarantees the tenant will not be evicted in the event of a foreclosure or sale of the property, as long as the tenant is not in default.
- Protects tenant's occupancy rights
- Applies in case of foreclosure or sale
- Often requested by tenants in commercial leases
Memory trick: No disturbance, no eviction, keep your lease position.