What is a non-disturbance agreement and why would a commercial tenant want one from a new lender or buyer?

A non-disturbance agreement is a promise, usually given by a landlord's lender and sometimes a buyer, that a tenant's lease will survive even if the landlord defaults on its financing and the lender forecloses or otherwise takes over the property, as long as the tenant itself isn't in default under its own lease. It's often paired with a subordination clause, where the tenant agrees its lease ranks behind the lender's mortgage, in exchange for this survival promise.

Tenants want this protection because, without it, a lender that forecloses on the landlord could potentially argue the tenant's lease was wiped out along with the landlord's ownership, leaving a tenant that built out a store or office at real expense suddenly without a secured right to stay. A non-disturbance agreement closes that gap by giving the tenant direct assurance from the party that could otherwise disrupt the tenancy.

For a tenant investing meaningfully in leasehold improvements or signing a long-term lease, asking for a non-disturbance agreement at lease signing, or whenever the landlord refinances, is a reasonable, common request, and landlords in institutional financings are often required to provide one as part of their own loan conditions.