Attornment And Non-Disturbance Agreements

Attornment grants authority or jurisdiction to a party even if no legal right exists. It is a legal device that is comparable to an assignment. Attornment may occur when a tenant acknowledges a new owner of the property as their new landlord. An example of attornment is if A owes a sum of money to B, B agrees that A pay the money to C and A agrees. A is said to have attorned to C and C can sue A for the debt. In a lending context, when a mortgagor/landlord defaults on its mortgage, a lender who enforces its remedies by realizing on the mortgaged property may seek to enjoy the benefits created after the mortgage, for example, from the property's tenants.

The Ontario Court of Appeal has held that absent an attornment agreement, pursuant to which the tenant has attorned to the a lender, a lender has no grounds to compel a tenant to fulfill obligations under a subordinate lease. Subordination occurs when a lease is entered into after a mortgage has been granted