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Non-disturbance agreement...

Posted by Ward-CA- on February 23, 2004 at 10:26 PM

In Reply to: UNRECORDED LEASES posted by AG on February 23, 2004 at 4:41 PM

: Does anyone know what happens to leases after a foreclosure sale for commercial properties? i know the basic rule as it applies to homes. Thanks much
================

AG,

The only interests or liens that count in a foreclosure contest must be recorded and those with a higher priority than a foreclosing lien remain unscathed, against the foreclosed property’s title.

The first interest or lien to record, vis-a-vis any other, is first in priority and the second to record is second in priority and so forth.

The fact the property type is residential, commercial, industrial, recreational or agricultural, etc. is immaterial as far as priority is concerned.

For a lease to have any priority it must be recorded or be the subject of a recorded Non-disturbance Agreement, wherein a senior lienor agrees not to disturb a junior lessee’s leasehold rights due to the senior’s foreclosure, as long as the lessee continues to pay the scheduled rent and otherwise perform under the lease.

Hope this helps.


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