Direct agreements or tripartite agreements are often an important feature of financings involving ground leases or single tenants, as well as in project finance.
Beyond serving as a simple estoppel confirming no default under the underlying lease or document, it will often provide for the sending of notices and provide for step in rights for the lenders to cure any defaults of the borrower the underlying lease as a precursor to the exercise of any mortgage enforcement remedies which will also require a standstill from the underlying ground lessor or tenant.
Step in right periods will be heavily negotiated and lenders will often seek the ability to assign the lease to a successor landlord (provided they qualify as an acceptable landlord under the lease); all the while attempting to avoid becoming a mortgagee in possession.
The parties will often map out obligations to coordinate efforts to cure any defaults jointly, particularly during any construction period.
This document will also often serve as the attornment and non-disturbance agreement for the parties.
These documents can take many forms but are often vital comfort to lenders.
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