Non Disturbance Agreement Template for the Philippines

A Non Disturbance Agreement is essential when you're leasing property that serves as collateral for a mortgage in the Philippines. This document creates a binding arrangement between you as the tenant, your landlord, and the property's lender, ensuring your lease rights remain protected even if foreclosure proceedings occur.

When do you need this document?

You need a Non Disturbance Agreement when entering into lease arrangements on mortgaged commercial or residential property. This becomes critical in scenarios where your landlord has existing mortgage obligations or seeks new financing using the leased property as collateral. Shopping centers, office buildings, and commercial spaces often require these agreements before major tenants sign long-term leases. The document also becomes necessary when lenders require assurance about stable rental income streams before approving mortgage applications. Banks and financial institutions typically mandate these agreements for properties with significant tenant improvements or long-term lease commitments that affect the property's value and marketability.

Key legal considerations

Your Non Disturbance Agreement must clearly define each party's rights and obligations under Philippine contract law. The non-disturbance clause should specify that your tenancy rights survive foreclosure, preventing the new property owner from immediately terminating your lease. Recognition provisions require the lender to acknowledge your existing lease terms and agree to honor them post-foreclosure. Attornment clauses establish your agreement to recognize the lender as your new landlord if foreclosure occurs. The document should include detailed notice requirements, specifying how and when parties must communicate about foreclosure proceedings, lease modifications, or defaults. Subordination provisions may require your lease to become subordinate to the mortgage, but with corresponding non-disturbance protections. Include specific procedures for rent payments during foreclosure proceedings and clarification about security deposit transfers to new owners.

Legal requirements in Philippines

Under the Civil Code of the Philippines, your Non Disturbance Agreement must meet standard contract requirements including mutual consent, lawful subject matter, and adequate consideration. The Property Registration Decree mandates proper registration for enforceability against third parties, particularly when dealing with registered land titles. You must ensure all parties have legal capacity to enter contracts and that corporate entities provide proper board resolutions authorizing the agreement. The document requires notarization under Philippine law to achieve full legal effect and admissibility in court proceedings. Anti-Money Laundering Act compliance may be necessary for high-value transactions, requiring identity verification and documentation of fund sources. Include specific governing law clauses referencing Philippine jurisdiction and courts for dispute resolution. The agreement should comply with lessor licensing requirements under local government regulations and include tax implications under the National Internal Revenue Code for all parties involved.