Non Disturbance Agreement Template for Malaysia

A Non Disturbance Agreement is a three-party contract that protects your lease rights when your landlord uses the property as security for a loan. Under Malaysian property law, this document ensures that if your landlord defaults and the lender forecloses, you can continue occupying the premises under your existing lease terms. The agreement creates binding obligations between you as the tenant, your landlord, and the lender, establishing clear procedures for various scenarios that may arise during the loan period.

When do you need this document?

You need a Non Disturbance Agreement whenever your landlord seeks financing using your leased property as collateral. Malaysian lenders typically require this document before approving loans secured by occupied commercial properties. The agreement becomes essential in shopping centers, office buildings, and industrial facilities where multiple tenants operate under long-term leases. Banks and financial institutions often mandate these agreements to protect their security interests while ensuring tenant stability. If you're entering a new lease on a mortgaged property, lenders may require this agreement as a condition of maintaining your occupancy rights.

Key legal considerations

The agreement must clearly define each party's rights and obligations under Malaysian contract law. Critical clauses include recognition of your existing lease terms, confirmation of the lender's security interest, and specific procedures for rent payments during foreclosure proceedings. You should ensure the document includes subordination clauses that balance your occupancy rights with the lender's security position. The agreement must address scenarios such as landlord default, property transfer, and modification of lease terms. Payment redirection clauses should specify when and how you'll pay rent directly to the lender. Include provisions for notice requirements, cure periods, and dispute resolution procedures that comply with Malaysian legal standards.

Legal requirements in Malaysia

Under the National Land Code 1965, the agreement must properly reference the property title and any registered charges. The Contracts Act 1950 requires clear consideration and mutual consent from all parties to ensure enforceability. You must comply with the Stamp Act 1949 by properly stamping the document within the prescribed timeframe to make it admissible in Malaysian courts. The Financial Services Act 2013 may impose additional requirements if the lender is a licensed financial institution. Registration under the Registration of Deeds Act 1951 may be necessary depending on your state's requirements. The document should acknowledge existing lease registration and comply with any restrictions under the property's title conditions. Ensure all parties have proper legal capacity and authority to enter the agreement under Malaysian law.