Attornment And Non Disturbance Agreement Template for Hong Kong

An Attornment And Non Disturbance Agreement is a crucial legal document that protects your interests when you're leasing property that's subject to a mortgage in Hong Kong. This tri-party agreement creates binding obligations between you as tenant, your landlord, and the mortgage lender, ensuring your tenancy rights remain secure even if the property faces mortgage enforcement.

When do you need this document?

You need this agreement when entering into a lease for property that's mortgaged or when your landlord is obtaining mortgage financing on your rented premises. Commercial tenants particularly benefit from this protection, as it prevents sudden eviction if the lender forecloses. The agreement is essential when you've invested significantly in fit-outs, established business operations, or have long-term lease commitments. Property developers and investors also require this document when structuring complex financing arrangements involving existing tenancies. Without this protection, you could face immediate eviction upon mortgage enforcement, regardless of your lease terms.

Key legal considerations

The attornment clause requires you to recognize the lender as your new landlord if they take possession, creating a direct landlord-tenant relationship. You must ensure the non-disturbance provision adequately protects your tenancy rights, including renewal options, rent review mechanisms, and any special terms in your original lease. Consider subordination clauses carefully, as they determine priority between your lease and the mortgage. The agreement should specify notice requirements, particularly how you'll be informed of any mortgage default or enforcement proceedings. Include provisions for security deposits, prepaid rent, and any tenant improvements you've made. Ensure the lender accepts all existing lease terms and cannot modify them unilaterally upon taking possession.

Legal requirements in Hong Kong

Under Hong Kong's Conveyancing and Property Ordinance, this agreement must be properly executed and may require registration under the Land Registration Ordinance to be effective against third parties. The document must comply with the Banking Ordinance if the lender is a licensed bank, ensuring proper security interest creation and enforcement procedures. The Landlord and Tenant (Consolidation) Ordinance governs the underlying tenancy relationship, and your agreement must not contravene statutory tenant protections. Proper legal descriptions of the property using government lot numbers are essential for enforceability. The agreement should reference relevant provisions of your original lease and mortgage documents to avoid conflicts. Consider stamp duty implications under the Stamp Duty Ordinance, as this tri-party agreement may attract additional duties depending on its structure and the property value involved.