Are you in business at premises which are a sublease? That is, does your landlord lease from someone else and sublease to you? If so, did you know that you are at risk of losing your lease if your landlord defaults?

A recent client with a substantial installation faced this issue. The company’s landlord (called a “sandwich” lease holder) defaulted. The fee owner evicted the sandwich lessor and my client was told to vacate within 7 days. This is because my client only had rights with the sub-landlord and was in not in contractual privity with the fee owner. When the sandwich lease is terminated the sublease goes with it.

This would have literally put my client out of business because the business’ primary production facility was in this location. We asked the master landlord to allow us to “attorn”  and become the tenant of the fee owner. They said no that they wanted to lease the entire building not just one space  (the other tenants had already vacated).

The solution: when you enter into a sublease ask whether the master landlord will enter into an “Attornment and Non-Disturbance Agreement.” This is an agreement in which the master landlord agreed to not disturb the tenancy of the sub-tenant in the event of a default by the sandwich leaseholder and the subtenant agrees to attorn to the master landlord – that is to stay in the premises and continue to pay rent.