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Hello, I have rented out my commercial space to a company to run their retail store. The property is under mortgage and hypothecated with a bank. The store has been operational for 3 months now. To register the rental agreement, the bank requires a No Objection Certificate (NOC). To provide the NOC, the bank is asking the tenant to add a clause in the rental agreement stating: "The Lessee would render their cooperation in case any recovery action is initiated by the Bank against the Borrower/Mortgagor in the future, including handing over the peaceful possession of the leased premises to the Bank if demanded by the Bank. In such a case, the Lessee has no objection to depositing 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." However, the Lessee is not agreeing to add this clause in the registration document. As a result, the bank is not providing the NOC, and the registration of the rental agreement is pending. What options do I have?
Since the property is mortgaged with the bank, the bank will not issue an NOC unless the tenant agrees to the required clause. The clause is standard for the bank’s security. If the tenant refuses, either convince them to add it or proceed only with an unregistered agreement. Ideally, take legal advice to negotiate a middle path between bank and tenant. For further legal assistance contact us on our helpline number.