HOW TO DRAFT A LANDLORD-TENANT NON-DISCLOSURE AGREEMENT

A Landlord-Tenant Non-Disclosure Agreement is a unilateral type of agreement signed between the Landlord and the potential tenant when the landlord of a residential property given in for rent/lease discloses some secret, private information or confidential information about the property to the tenant or the potential tenant, or if the tenant or the potential tenant discloses some secret, private or confidential information regarding the purpose he/she will be using the property or the business they are going to carry inside the property.

HOW TO DRAFT A LANDLORD-TENANT NON-DISCLOSURE AGREEMENT

HOW TO DRAFT A LANDLORD-TENANT NON-DISCLOSURE AGREEMENT


INTRODUCTION:

A Landlord-Tenant Non-Disclosure Agreement is a unilateral type of agreement signed between the Landlord and the potential tenant when the landlord of a residential property given in for rent/lease discloses some secret, private information or confidential information about the property to the tenant or the potential tenant, or if the tenant or the potential tenant discloses some secret, private or confidential information regarding the purpose he/she will be using the property or the business they are going to carry inside the property. The concept Landlord-Tenant Non-Disclosure Agreement (NDA) has been developed to procure a binding signature from the tenant or the landlord who is aware of some secret, private information or confidential information that should remain protected for benefit of both the parties.

The information so disclosed by the landlord can be related to property revenue, planned capital improvements, taxes, or any other secret, confidential information which provides the landlord with an edge over the other landlords and is of such a nature that it provides the landlord some advantage over other landlords. Any failure to keep such information undisclosed may cause adverse effects on both the parties to the agreement. Although the landlord is required by the law to disclose some information like security deposits and lead paint etc. these types of information do not stand on the grounds of forming a non-disclosure agreement as they are basic information made mandatory by the law to be disclosed. The main motive of the landlord-tenant non-disclosure agreement is to prevent any damages or losses that may be caused due to the disclosure of any confidential information between the landlord and the tenant.

Any disclosure of such confidential information may cause a bad impact on the landlord’s ability to make any lease or negotiate with other potential leases regarding the property in the future and the potential tenant can also use the information to evaluate the property. By signing the NDA, the tenant agrees that he/she, their partner, directors, employees, subordinates, associates, agents, attorney, etc., shall not intentionally, unintentionally and voluntarily or involuntarily disclose any information so mentioned in the NDA to any third party (other than the parties of the contract) without any prior consent of the other party of the contract. The NDA will provide a detail of the landlord’s expectations from the tenant regarding this matter and will clearly define what information is to be considered secret, private, or confidential and therefore to be kept undisclosed.

LANDLORD-TENANT NON-DISCLOSURE AGREEMENT(NDA):

Drafting a landlord-tenant NDA is a task that requires proper knowledge, experience, planning, and research. For making a proper NDA certain information should be considered. The following information should always be considered for drafting an NDA: -

  1. PARTIES CLAUSE:

The NDA must consist of a party clause that should mention the name, address, age, and other details of each party. Such information is necessary for determining the contractual capacities of the parties by identifying them. It is a mandatory clause without which no agreement can be formed.

  1. PROPERTY CLAUSE:

This is the basic clause for the NDA as it identifies the residential property to be rented and also mentions the basic details about such property. The information of the property includes the registered address, location, size, state, pin code, etc.

  1. INTEREST CLAUSE:

This clause shall consist of a statement stating that the potential tenant is interested in renting the property of the landlord and according to which he/she is willing to enter into an agreement.

  1. PERMITTED USE CLAUSE:

This clause must contain a statement duly agreed by the potential tenant that this confidential information so mentioned in the contract can only be used for the purpose of evaluating the property and not for any other purpose for harassing the landlord with such information in any way.

  1. CONFIDENTIAL INFORMATION CLAUSE:

All the information in regard to property taxes, revenues, or other capital investment related information that provides the Landlord with an edge over other Landlords or business plans, layouts, or financial details of the Potential Tenant is categorized confidential. Only the accountants, financial representatives, attorneys, and advisors of the Potential Tenant can have the access to such information.


 

  1. NON-DISCLOSURE CLAUSE:

It is the most important clause of the agreement in which both the parties should agree that:

  1. How much information is kept confidential?

  2. What they are supposed to do and not to do in order to keep the information confidential;

  3. Who can access to the information and under what all situations?

  1. DISCRETION CLAUSE:

This clause puts a restriction on the Tenant from having any direct contact with the property, its employees, or any other authorized person in the property and also restricts potential tenant from any interference in business arrangements or any agreement between the landlord and the agent. The tenant also promises to return the material provided by the landlord. Generally, according to the agreement, the tenant is given 30 days to return the material but this duration depends on the understandability of the parties.


 

  1. BINDING EFFECT CLAUSE:

This clause mentions the laws which govern the agreement and states the period for which the agreement is valid.


 

  1. COST OF ENFORCEMENT CLAUSE:

This clause is important in cases where there might be a judicial proceeding regarding the agreement. The party shall be entitled to recover from the other party all the expenses incurred in consequence of such proceeding.


 

  1. WARRANTY CLAUSE:

This clause works according to the doctrine of “Caveat Emptor” which means “buyer beware”. According to this clause, the potential tenant is warranted that he does not guarantee, express, or implied, the authenticity of any confidential information provided by the Landlord.

 

  1. REPRODUCTION PROHIBITED CLAUSE:

According to this clause the potential tenant is prohibited from making any copies of the written information, notes of discussions or negotiations, photographs, financial statements, or any written material provided by the Landlord or Agent to the Potential Tenant or as requested by the Potential Tenant from the Landlord or the Agent.


To know more about, what is a non-disclosure agreement (NDA) and how it is made, see the video below-

 

 

HOW TO DRAFT A LANDLORD-TENANT NON-DISCLOSURE AGREEMENT(NDA):

  1. FIRST PARAGRAPH:

It should consist of the “Parties Clause” and mention the date of formation of the agreement from which the contract comes into effect and both the parties should agree to the date so mentioned. The date so mentioned is the date when the last party to the agreement signs the agreement.


 

  1. SECOND PARAGRAPH:

This is the most important part of the contract as it consists of the “Property Clause”, “Interest Clause”, “Permitted Clause”, “Confidential Information Clause”, “Non-Disclosure Clause”, “Discretion Clause” And “Binding Effect Clause”.


 

  1. THIRD PARAGRAPH:

This paragraph should include the “Cost of Enforcement Clause”, “Warranty Clause” And “Reproduction Prohibited Clause” and with this paragraph, the terms and conditions of the agreement come to an end.


 

  1. SIGN OFF:

After the conclusion of the third paragraph, the contract should be concluded by all the parties or their agents or representatives who have the capacity to sign the agreement on behalf of the parties of the agreement.

To know more about, how to protect yourself from bad tenants, see the video below-

 

 


 

BY-

GAURAV GUPTA