Hotels, Resorts & Tourism - Some Further Thoughts on Non Disturbance Agreements

Long time readers of this newsletter will be aware that we have given considerable attention to Non Disturbance Agreements (NDAs) in past editions.

In a post GFC world, an increasing number of operators are insisting that an owner obtain an NDA in a form which is either attached to the management agreement or acceptable to the operator. Often however, the owner, the operator and the financier will have differing views as to whether an NDA is appropriate and, if so, its content.

This process may be further complicated if the financier is not known at the time the owner is negotiating the management agreement and the operator's NDA requirements. Accordingly, during such negotiations it is important for an owner to introduce a degree of flexibility with respect to its dealings with the operator to provide reasonable latitude to deal with the requirements of its financier, whoever that may be.

The purpose of this article is to provide some points to consider in relation to the issues surrounding NDAs. The starting point to achieving a satisfactory outcome for all concerned is a consideration of the operator, financier and owner motivations.