Attornment: Overview, definition, and example
What is attornment?
Attornment refers to a legal agreement or acknowledgment by a tenant to recognize a new owner or landlord as their landlord under an existing lease agreement. This typically occurs when the property changes ownership, such as through a sale or foreclosure. The tenant agrees to continue honoring the terms of the lease with the new owner, maintaining continuity of the landlord-tenant relationship.
For example, if a building is sold to a new owner, attornment ensures that the tenant continues to pay rent and comply with the lease terms, even though the landlord has changed.
Why is attornment important?
Attornment is important because it protects both the tenant and the new owner by ensuring the lease remains valid and enforceable after a change in property ownership. For SMBs leasing commercial spaces, an attornment clause provides certainty that their lease will continue under the same terms, even if the property is sold or transferred.
For landlords, attornment ensures a smooth transition of ownership without disruption to rental income or tenant obligations, minimizing potential conflicts or misunderstandings.
Understanding attornment through an example
Imagine an SMB rents office space under a long-term lease. The property is sold to a new owner during the lease term. The lease agreement includes an attornment clause, which requires the tenant to acknowledge the new owner as their landlord and continue paying rent under the original lease terms. This ensures the SMB can remain in the office without renegotiating the lease.
In another scenario, a retail tenant in a shopping center faces a situation where the property is foreclosed, and a bank takes ownership. An attornment clause in the lease obligates the tenant to recognize the bank as the new landlord and comply with the existing lease, ensuring continuity of the retail operation.
An example of an attornment clause
Here’s how an attornment clause might appear in a lease agreement:
“The Tenant agrees that, in the event of a transfer of ownership of the Premises, including through sale, foreclosure, or assignment, the Tenant shall attorn to the new owner or successor in interest as the Landlord under this Lease. The Tenant further agrees to recognize such new owner or successor and continue to perform all obligations under this Lease as if such new owner or successor were the original Landlord.”
Conclusion
Attornment ensures that the landlord-tenant relationship continues uninterrupted when a property changes ownership. For SMBs, an attornment clause provides assurance that their lease rights will remain intact, avoiding potential disruptions. For landlords or property buyers, it ensures rental income and tenant compliance during ownership transitions. A well-drafted attornment clause fosters stability, clarity, and continuity in landlord-tenant relationships.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.