A commercial real estate non-disclosure agreement is a legal document that lets a real estate agent, landlord, or buyer reveal sensitive information to a tenant or buyer. When both parties sign this document, the disclosing party receives confirmation that the receiving party won’t spread the information to unauthorized parties.
The Interested Parties
- Tenant NDA: If a tenant wants to rent a property, a landlord can have them sign an NDA to maintain the confidentiality of the information they receive.
- Buyer NDA: If a buyer wants to purchase a property, a seller can have them sign an NDA to keep specific information private.
What Is a Commercial Real Estate Non-Disclosure Agreement?
A commercial real estate non-disclosure agreement is a document used by a property owner to prevent potential tenants, buyers, business partners, investors, or consultants from disclosing shared confidential information.
Some information this contract can protect includes the following:
- Partners’ or investors’ identities or financial statuses
- Marketing plans
- Taxes
- Property revenue
- Development, expansion, or renovation plans
- Pending lawsuits
- Zoning issues
- Environmental assessments
- Ongoing or potential negotiations
This information can give a property owner a competitive edge over other owners in their area so that they may have any parties receiving this information sign an NDA to maintain their advantage.
How to Write a Commercial Real Estate NDA
Competing in the commercial real estate field can be difficult, but having an NDA can help you remain competitive and complete your desired transactions. Explore the steps involved in writing an NDA below.
Step 1 – Download a template in PDF or Word format.
Step 2 – List the date the agreement will go into effect.
Step 3 – Name all parties, including the buyer/tenant and the landlord. You should also name an agent if there’s one involved in the arrangement.
Step 4 – Provide the address of the property in question. Include the street name, city, and state. Describe the property, as this can establish clarity for all parties.
Step 5 – Identify the confidential information you’re disclosing. State the receiving party’s obligation to keep this information private. Ensure the information isn’t already public knowledge. If it is, the NDA won’t be legally enforceable.
Step 6 – Ensure the contract documents the state where the agreement was created. This state will provide the governing law in case a breach of contract harms the disclosing party.
Step 7 – Once the tenant or buyer agrees, you can acquire their signature to establish the NDA’s validity.
Frequently Asked Questions
When should I use a commercial real estate NDA?
Using a commercial real estate NDA with all parties to whom you share similar information is good practice. This way, a buyer, tenant, or another party who signed an NDA with you can’t argue that you didn’t consistently label the information “confidential.”
Is a commercial real estate NDA legally enforceable?
A commercial real estate NDA can be a legally enforceable document as long as it contains truly confidential information, has the signatures of both parties, and doesn’t contain information about illegal activities.
What happens if the receiving party breaks an NDA?
If a party, such as a buyer or tenant, breaks an NDA, the property owner can take the violating party to court. Once they’re in court, the property owner can seek injunctive relief, which prevents the violating party from continuing to share the information in an unauthorized manner. The property owner can also seek monetary damages if the breach results in financial losses.
