Notice Of Attornment: What It Means For Commercial Leases

If you lease a shop, warehouse, office, café space or other commercial premises, you’ll probably deal with the “usual” lease paperwork at the start - rent, outgoings, term, options and make good.

But sometimes, a letter arrives mid-lease that can feel far more unsettling than an annual rent review: a notice of attornment (sometimes called an attornment notice or attornment letter).

This document can affect who you pay rent to, who can give directions under the lease, and what happens if your landlord is in financial trouble. It’s common in commercial property transactions and property finance arrangements, but it’s also commonly misunderstood.

Below, we break down what a notice of attornment is, when you might receive one in Australia, what it means for your business, and the practical steps you should take before you sign anything or change your rent payments. This article is general information only and isn’t legal advice.

What Is A Notice Of Attornment?

In simple terms, a notice of attornment is a written notice telling a tenant that a different party is entitled to receive the rent and/or deal with the lease - usually because the property has been sold, or because a lender (or an enforcement appointee) has become entitled to collect rent due to the landlord’s finance arrangements.

“Attornment” is an old property law concept. The practical effect today is usually one or more of the following:

• you’re told to pay rent to someone else (for example, a purchaser/registered owner after settlement, a mortgagee in possession, a receiver appointed by a lender, or a property manager acting for them);
• you’re asked to acknowledge the new party as your landlord (or as a party entitled to give directions under the lease, including about rent); and/or
• you’re asked to confirm certain facts about your lease (often overlapping with an “estoppel certificate”).

Not every notice of attornment is identical. Some are very short. Others include formal acknowledgements, tenant warranties, and releases that can materially affect your rights.

Why Do Landlords And Lenders Use Attornment Notices?

From a business perspective, you can think of the notice of attornment as a “risk management” tool for whoever is stepping into (or may step into) the landlord’s position, or whoever is authorised to collect rent.

For example:

• Purchasers want comfort that the tenant will pay rent to the new owner after settlement.
• Lenders want a clear pathway to collecting rent if they ever enforce their security (for example, if a landlord defaults on its loan) and the lender (or its appointee) becomes entitled to the rent.
• Receivers (appointed by a lender) want to stabilise cash flow while they manage the landlord’s financial position.

The goal is usually continuity: the lease continues, the tenant stays put, and rent continues to be paid - just to a new recipient.

When Would You Receive An Attornment Notice In Australia?

You’ll typically see an attornment notice when something changes behind the scenes with the property or the landlord’s finance arrangements. Common scenarios include:

1) The Building Is Sold (New Owner Takes Over)

If the property is sold, the purchaser generally becomes the landlord under the lease from settlement (subject to the lease terms). In many cases, the tenant is notified of where to pay rent next and who to contact going forward.

This can look like a simple “change of landlord” notice, but sometimes it’s presented as a notice of attornment with tenant acknowledgements.

2) The Landlord Has Financed The Property (And The Bank Wants Protection)

Commercial properties are commonly mortgaged. Lenders may require an attornment arrangement to ensure that if the lender enforces its security and becomes entitled to collect rent (directly or via an appointee), rent can be redirected without delays or disputes.

This is often connected to broader security documents such as a General Security Agreement (particularly where the landlord is a company and the lender has taken security over its assets and rights).

3) A Receiver Or Controller Is Appointed

If the landlord defaults under its finance arrangements, a lender may appoint a receiver/controller to manage the secured property and collect rents. Tenants may then receive a notice telling them to pay rent to the receiver (or their nominated account).

This is one of the more “urgent” situations where acting quickly matters - but you still need to verify the notice is legitimate and understand what you’re being asked to sign.

4) The Lease Is Being Assigned Or Re-Structured

Less commonly, a notice of attornment can appear alongside lease changes (or documentation that changes who has rights under the lease). If your lease itself is being transferred, you may also see documents like a Deed of Assignment of Lease in the mix.

While attornment is not the same thing as an assignment, in practice these documents can be bundled together during property transactions - which is why it’s important to read the package as a whole, not just the covering email.

What Does A Notice Of Attornment Mean For You As A Tenant?

For most small business tenants, the biggest concerns are practical:

• Do I still have the same lease terms?
• Do I have to sign this?
• Who do I pay rent to now?
• Will this affect my options to renew, rent reviews, or repairs?
• Is my security deposit or bank guarantee safe?

The answers depend on the situation and what the document actually says. But there are some common themes to understand.

Your Lease Usually Continues - But Administration Changes

In many cases, the lease itself continues on the same terms, and the notice simply updates the “who”:

• who is entitled to receive rent;
• who can give you notices under the lease; and
• who you contact for repairs, approvals and access.

That said, some attornment notices include clauses that go further than administration and effectively ask you to waive rights or confirm things you’re not 100% sure about.

You Might Be Asked To “Acknowledge” Or “Attorn” To A New Party

An attornment notice may ask you to acknowledge that a new party is your landlord, or that you will treat them as the landlord if certain events occur (for example, if the lender enforces its mortgage and becomes entitled to the rent).

This can be reasonable - but it’s worth checking whether:

• the new party is already the owner (e.g. after settlement), or only a potential replacement if enforcement happens later;
• you’re being asked to agree to things beyond your lease; and
• the notice changes how disputes, notices, or rent payments work.

Double Rent Risk (And How To Avoid It)

One of the biggest risks is paying rent to the wrong party.

If you pay rent to someone who isn’t entitled to it, you may still owe rent to the rightful party under the lease. That’s a nightmare scenario for cash flow.

That’s why you should treat any notice of attornment (especially one with new bank details) as a “verify first” document.

It Can Affect How You Negotiate Or Exit The Lease

If a lender or receiver is involved, it can change the tone of discussions about rent abatements, lease variations, or early exits. These parties may be less flexible than a typical landlord - or they may be willing to negotiate quickly to keep occupancy stable.

If your business is already thinking about whether it can stay in the premises, it’s a good time to get advice on your options under the lease (including issues that can arise when breaking a commercial lease agreement is on the table).

What Should You Check Before You Sign Or Comply With An Attornment Letter?

It’s common for attornment notices to be presented as “standard paperwork”. Sometimes they are. Sometimes they’re not.

Here’s a practical checklist you can work through before you sign anything or redirect rent payments.

1) Confirm The Notice Is Legitimate

If the notice includes new bank account details, treat it like you would treat any other “change of payment details” request - carefully.

• Check the sender’s email domain and contact details.
• Call the landlord or managing agent using a number you already have (not the number in the email) to confirm instructions.
• If a receiver/controller is involved, confirm their appointment and authority to collect rent.

2) Identify Who The New Party Actually Is

Attornment notices often involve multiple parties:

• a current landlord (registered owner);
• a property manager/agent;
• a purchaser (incoming landlord);
• a lender/mortgagee; and/or
• a receiver/controller.

You want clarity on who is entitled to rent now, and whether your acknowledgement applies immediately or only upon a future event.

3) Read The Fine Print For “Extra” Tenant Promises

A notice of attornment can be as simple as “pay rent here going forward”. But sometimes it also includes statements like:

• you confirm there are no disputes under the lease;
• you confirm the landlord is not in breach;
• you release the new party from existing claims; or
• you agree the lease is valid and enforceable without qualification.

If you have outstanding issues (for example, unresolved repair requests, fit-out disputes, rent concessions, or side letters), these clauses can create real risk.

If anything looks overly broad, it’s worth getting legal advice before you sign. A quick review can save you from accidentally giving up bargaining power later.

4) Check How Notices Under The Lease Must Be Given

Most leases contain strict rules about where notices must be sent and how they must be delivered. If the notice of attornment changes the landlord’s address for service (or introduces a new notice address), you want to make sure it aligns with the lease mechanics.

This matters if you need to serve notices yourself later - for example, for exercising an option, requesting consent, disputing outgoings, or giving a notice to vacate at the end of term.

5) Confirm What Happens To Your Security (Bond / Bank Guarantee)

If you provided a bank guarantee or bond, confirm:

• who holds it now;
• whether it needs to be transferred; and
• whether any deed or acknowledgement impacts how/when it can be called on.

This is especially important where the property is sold and the outgoing landlord is meant to hand the security to the incoming landlord at settlement.

6) Make Sure The Document Matches The Commercial Reality

Ask yourself: does the notice match what’s happening on the ground?

• If the building was sold, has settlement actually occurred?
• If a receiver is involved, has the property manager changed?
• Are you being asked to pay rent to a party that doesn’t appear connected to the property?

If anything feels inconsistent, pause and verify.

How Do You Respond To A Notice Of Attornment? (A Practical Step-By-Step)

If you’ve received a notice of attornment, you typically want to move fast - but not so fast that you sign away rights or pay rent to the wrong place.

Here’s a practical approach we often recommend for business tenants.

Step 1: Acknowledge Receipt (Without Agreeing Yet)

It’s usually fine to reply confirming you received the notice and are reviewing it. If you’re unsure about the implications, avoid language like “we agree” or “we accept” until you’ve checked the document properly.

Step 2: Request Supporting Information If Needed

Depending on the context, you may ask for:

• confirmation of sale/settlement details (if the property was sold);
• evidence of appointment of a receiver/controller (if relevant);
• written confirmation from the existing landlord/agent; and/or
• clarification about security deposit/bank guarantee transfer.

Step 3: Review Your Lease For Clauses About Sale, Mortgage Or Attornment

Many leases contain clauses that anticipate these events. They may already require you to recognise a new owner, or to sign certain reasonable documents if requested.

If you’re unsure what your lease requires, it can be worth having a lawyer review the lease terms and the notice together - particularly if the notice includes releases or warranties.

Step 4: Update Your Accounts Payable Process Carefully

If you’re changing bank account details for rent payments:

• save written confirmation from a trusted contact (existing agent/landlord);
• update your accounting system with a note explaining why the change happened; and
• consider making the first payment after the change with extra verification (especially if the notice arrived unexpectedly).

Step 5: Consider The Bigger Picture (Renewals, Fit-Out, Exit Plans)

A notice of attornment can be a “trigger point” to reassess your lease strategy.

For example:

• If you have an upcoming option, make sure you know the correct address for service and timing requirements.
• If you’re negotiating a variation (rent relief, fit-out works, signage approvals), confirm who has authority to approve it.
• If you’re considering ending the lease, get advice early on your risk exposure and process. Depending on your state and lease type, the steps can be technical, and it may overlap with issues like Lease Termination Advice.

Common Questions Small Businesses Ask About Notices Of Attornment

Do I Have To Sign A Notice Of Attornment?

It depends.

Some leases require you to sign reasonable documents acknowledging a new owner or certain lender/enforcement rights. In other cases, you may not be strictly required to sign the notice itself - but once ownership or lawful control changes (and you’ve verified it), you may still need to redirect rent payments and follow legitimate directions about payment and administration.

The key is that not all attornment notices are “just administrative”. If the document contains broad releases, warranties, or changes to your rights, it’s worth getting advice before signing.

Can My Rent Increase Because Of An Attornment Notice?

Usually, the notice itself shouldn’t change your rent. Rent increases should continue to be governed by your lease (for example, CPI, fixed increases, or market review clauses).

If the new party tries to introduce new commercial terms outside the lease, you should treat that as a separate negotiation - not something automatically imposed by an attornment notice.

What If I’m Behind On Rent?

If a receiver/controller or mortgagee enforcement is involved, rent arrears can become more sensitive because the party entitled to collect rent may move quickly to enforce the lease.

If you’re experiencing cash flow pressure, it’s often better to address it proactively and seek advice early - rather than waiting for formal breach notices to escalate.

Is A Notice Of Attornment The Same As A Notice To Vacate?

No - they’re different concepts.

A notice of attornment is generally about who you pay and who has landlord rights. A notice to vacate is generally about ending occupation.

If you’re dealing with end-of-lease issues, it’s important to understand what your lease and state laws require (for example, in NSW, issues can arise around a Notice To Vacate process).

What If The Property Is A Shared Workspace Or Licence Arrangement?

Some businesses operate under a licence rather than a lease (common in shared workspaces, pop-ups, or “desk rental” arrangements). Attornment concepts can still come up, but the documents and risk profile can look different.

If your occupancy is under a licence, having the right paperwork in place from the start matters a lot - including documents like a Property Licence Agreement.

Key Takeaways

• A notice of attornment is a notice that a new party (often a purchaser, lender, mortgagee in possession, or receiver) is entitled to receive rent and/or deal with your lease.
• Most of the time, your lease continues on the same terms - but you must be careful about where you pay rent and what acknowledgements you sign.
• Before acting on an attornment notice, verify it’s legitimate, confirm who the new party is, and check whether the document includes extra promises (like releases or warranties).
• Updating rent payment details without verification can expose you to “double rent” risk if rent is paid to the wrong party.
• If there are disputes, side agreements, arrears, or you’re considering exiting the lease, a quick legal review can help you avoid costly mistakes.

If you’d like help reviewing a notice of attornment or your commercial lease, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.