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To provide NOC, bank is asking tenant to add a clause to the rental agreement stating that "Lessee would render their cooperation in case any recovery action is initiated by the Bank against the Borrower/Mortgagor in future including handing over the peaceful possession of the leased premises to the Bank, if demanded by the Bank. In such case, Lessee has no objection to deposit the rent directly with the Bank, if there is a written demand by the Bank to that effect and they shall not question the same".
Lessee is not agreeing to add this in registration document. Now bank is not providing NOC and hence registration of rental agreement is pending. As per advise from a lawyer(he also acknowledged that bank's ask is valid one) I have sent a register post with delivery acknowledgement letter asking the company to agree and add the condition requested by bank in rental agreement for which they have not responded yet. Lessee over email confirms that they are not related with bank in any matter and I should work with bank to get NOC. They have invested for their business in the rented property and they respond as "Lessee will abide by whatever is as per law. Lessee will not be limited to act as per Law and lessee has all right to safeguard and protect their huge investment as per law."
Now, I sit between 2 corporate companies standing in their own terms and I am helpless in the situation. Can anyone suggest how to go forward from here? What are the implications of delay in registering the rental agreement (for no fault of mine)? Is the demand from bank valid one? Is the hold by the lessee a valid one? I can be reached at ▮▮▮
Suggested Middle Ground Clauses
Here are some compromise options:
Option 1 - Modified Cooperation Clause:
"In the event of the Bank initiating recovery proceedings against the Landlord due to default in loan repayment in accordance with applicable law, the Lessee agrees to cooperate with lawful directions from the Bank, subject to the following conditions:
a) Lessee's lease rights and tenure shall continue to be honored by the Bank
b) Any rent redirection to the Bank shall be adjusted against Lessee's rental obligations to Landlord
c) Lessee shall receive 90 days' written notice before any possession proceedings
d) Lessee's right to peacefully conduct business shall not be disturbed during the subsistence of this agreement, subject to timely rent payments
e) All investments and fixtures installed by Lessee shall be protected and Lessee given reasonable time for removal if possession is required"
Option 2 - Conditional Cooperation:
"The Lessee acknowledges that the property is mortgaged to [Bank Name]. In case of default by the Landlord:
a) Lessee will cooperate with the Bank as per applicable law
b) Lessee may deposit rent with the Bank upon receiving written demand AND court order/legal directive
c) Such cooperation shall not prejudice Lessee's rights under this lease agreement
Bank shall provide Lessee minimum [6 months] notice before seeking possession
Lessee's business operations shall not be disrupted during the notice period, provided rent is paid as directed.
Option 3 - Escrow/Notice Based Approach:
"Recognizing the Bank's secured interest in the property, Lessee agrees that:
In case of written notice from the Bank regarding Landlord's loan default, Lessee will deposit subsequent rent in an escrow account
Rent will be released as per joint instructions of Landlord and Bank, or as per court directions
Lessee's lease term and rights shall remain protected
Minimum [180 days] notice shall be provided before any possession demand
Lessee reserves right to seek legal remedy to protect their investment and business interests.
In the event the document is not registered, it becomes month to month tenancy and the person to lose the most is the lessee, as such lease can be terminated by giving 15 days' notice.