Nondisturbance Clause: What It Means, How It Works

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Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

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Updated April 13, 2024
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What Is a Nondisturbance Clause?

A nondisturbance clause is a provision in a mortgage contract that ensures that a rental agreement between the tenant and the landlord will continue under any circumstances. This is done primarily to protect the renter from eviction by the mortgagor if the property is foreclosed upon by the lender.

A nondisturbance clause ensures that a tenant will not be evicted in the event that the landlord goes bankrupt.

Key Takeaways

  • A nondisturbance clause in a mortgage guarantees that a tenant will not be evicted from a property that has been foreclosed on by a lender or due to some other circumstance.
  • Such a clause may apply to either a residential or commercial leaseholder and mortgagee.
  • A nondisturbance clause is often written in conjunction with an attornment clause, whereby the leaseholder or tenant will automatically recognize the new owner of the property as the landlord.

Understanding Nondisturbance Clauses

A nondisturbance clause can also come into play if the property the tenant occupies is sold by the owner rather than a foreclosure or bankruptcy. The tenant can retain the rights under the clause as long as they are not in default. Such a clause may be bundled with other terms and agreements that the tenant signs when they agree to occupy a space, especially with a commercial property. 

For instance, a nondisturbance clause is often included within a subordination nondisturbance and attornment agreement (SNDA). The subordination clause would make a tenant's leasehold junior interest to the mortgage interest of a lender.

This would let the landlord seek financing with the property as collateral after the tenant signed agreements to occupy space there. The attornment clause is a guarantee that the tenant will recognize the new owner of the property as the landlord and continue making rental payments to them for the duration of the rental term when the property changes hands.

Why a Nondisturbance Clause Might Be Demanded

As a benefit for business tenants in commercial properties, a nondisturbance clause can help abate the possibility of a shakeup of their costs by ensuring that their rental terms will be honored if there is a change in ownership of the property.

This could also protect a business tenant who invests in renovations to the space they occupy in the event that the landlord loses the property in foreclosure or bankruptcy and the tenant is named as a defendant.

Without such a clause, the tenant might lose use of the space as well as their investment in the renovations made to further their business at that property. Some mortgage lenders may try to limit the obligations afforded in a nondisturbance clause to simply allowing the tenant to remain in the space at the agreed-upon terms of the lease.

Other Considerations

A nondisturbance clause has a different application for mineral rights. In this case, the clause provides that the mineral extraction process does not interfere with any surface development of the land. For example, an oil company that drills wells on a piece of property may not interfere with the construction of a building or other developments on that property.

What Is an SNDA Clause?

A subordination nondisturbance and attornment clause (SNDA) states that if a landlord defaults on the mortgage, neither the landlord nor the lender can cancel the renter's lease. An SNDA protects the renter.

What Is the Purpose of a Subordination Clause?

A subordination clause in a mortgage protects the lender. It states that if a borrower defaults, the lender has the right to repossess the home, sell it, and cover their loan balance first before any other creditor. It ensures that the lender gets first priority in debt repayment.

What Type of Mortgage Might Contain a Subordination Clause?

A home with two mortgages is most likely to contain a subordination clause, as there are now two parties that could technically claim the asset (house) to cover outstanding debt obligations. The subordination clause will state which creditor is in line first.

The Bottom Line

Nondisturbance clauses are an added protection for renters in their lease agreements. They ensure that the renter won't be evicted if the home is foreclosed due to the owner not meeting mortgage obligations.

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