Document background
The Lease Subordination Agreement is a crucial document in Malaysian real estate financing transactions where a property owner seeks to obtain or refinance a loan while having existing tenants in the property. This agreement is necessary when a lender requires its security interest to have priority over any existing leases, which is common in commercial property financing. The document balances the lender's need for security with the tenant's need for occupancy protection, typically including subordination, non-disturbance, and attornment provisions. It must comply with Malaysian property laws, particularly the National Land Code 1965 and related regulations, and usually requires registration with the relevant land office. The agreement becomes particularly important in development projects, refinancing situations, or when significant tenants occupy the mortgaged property.
