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Non-Disturbance Agreement (NDA)
Practical Law Glossary Item 2-549-3557 (Approx. 2 pages)
Glossary
Non-Disturbance Agreement (NDA)
Also known as a recognition agreement. In a subleasing context, an agreement that is usually between a prime landlord and a subtenant. Sometimes third parties with an interest in the real property are also signatories to the agreement, such as a ground lessor or the prime landlord's lender.
An NDA primarily sets out the understanding between the parties concerning their respective rights and obligations to each other if the primary lease terminates because of a tenant default not caused by the subtenant.
The subtenant typically requests an NDA during the negotiation of the sublease. An NDA generally includes the prime landlord's agreement that if the prime lease is terminated due to the tenant's default, the prime landlord must:
- Not disturb the subtenant's possession of its subleased premises.
- Recognize the sublease as a direct lease between the prime landlord and the subtenant.
- Recognize the subtenant as the direct tenant of the subleased premises.
An NDA can also serve as a prime landlord's acknowledgment of certain options, if any, granted to the subtenant in the sublease, including options to:
- Renew the sublease term.
- Expand or contract the subleased premises.
- Purchase the real property.