notice of assignment of rents general

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Properly Enforcing an Assignment of Rents

Reading Time: 5 minutes

In Florida, lenders typically obtain an “assignment of rents” if the property produces income by collecting rent, such as an apartment complex, rental home, rental space, or office building. An “assignment of rents” allows the lender to collect the rent payments, if the borrower defaults on their loan payments. Although the lender and borrower may agree to the assignment of rents in the loan documents, the procedure for enforcing the assignment of rent is governed by Section 697.07, Florida Statutes .

assignment of rents enforce assignment of rents actual assignment of rent sequestration of rents

The Assignment of Rents Should be Recorded

If a lender and borrower agree to the assignment of rents as security for repayment of debt in a mortgage document, the lender will hold a lien on the rent payments. However, to perfect its rents lien against third parties, the lender must record the mortgage in the public records of the county in which the real property is located. Fla. Stat. § 697.07 (2).

How Can a Lender Enforce the Assignment of Rents?

Section 697.07 provides two methods for the lender to enforce the assignment of rent: (i) the actual assignment of rent to the lender, and (ii) the sequestration of rents into the court registry. Wane v. U.S. Bank, Nat’l Ass’n , 128 So. 3d 932, 934 (Fla. 2d DCA 2013) (“Section 697.07 draws a clear line between a motion seeking sequestration of rents into the court registry [under subsection (4)] and a motion seeking an actual assignment of rents to the lender pending foreclosure [under subsection (3)].”).

(i) Actual Assignment of Rent to the Lender

The first method, the actual assignment of rent to the lender, is provided in Section 697.07 (3). If the borrower defaults on the loan, the lender can make a written demand to the borrower to turn over “all rents in possession or control of the [borrower] at the time of the written demand or collected thereafter,” minus any expenses authorized by the lender in writing. Fla. Stat. § 697.07 (3). If the borrower does not turn over rent payments after the lender has made a written demand, the lender may foreclose on the rents lien and collect rent payments, without having to foreclose on the underlying mortgage. Ginsberg v. Lennar Fla. Holdings, Inc. , 645 So. 2d 490, 498 (Fla. 3d DCA 1994) (“[A]n assignment of rent creates a lien on the rents in favor of the mortgagee, and the mortgagee will have the right to foreclose that lien and collect the rents, without the necessity of foreclosing on the underlying mortgage.”).

To receive a court order for the actual assignment of rent, the lender will have to prove that there was a default, and that it made a written demand to the borrower to turn over rent payment. Wane , 128 So. 3d at 934. Additionally, an evidentiary hearing will be required.

(ii) Sequestration of Rent Into the Court Registry

The second method, the sequestration of rent into the court registry, is provided in Section 697.07 (4). This method can only be used if there is a pending mortgage foreclosure lawsuit. Unlike the first method, the lender does not have to prove that there was a default or make a written demand, and an evidentiary hearing is not required.

Either the borrower or lender may make a motion to the court for sequestration of rent into the court registry. Upon such a motion, a court, pending final judgment of foreclosure, may require the borrower to deposit the collected rents into the court, or in such other depository as the court may designate. The court must hear the motion on an expedited basis, and the moving party will only be required to show that there is a pending foreclosure lawsuit, and that there is a provision in the loan documents for the assignment of rent. Wane , 128 So. 3d at 934.

Moreover, a borrower cannot avoid sequestration of rents by raising defenses or counterclaims. Id. ; Fla. Stat. § 697.07 (4). In addition, the borrower will be required to submit records of receipt of rent to the court and lender, typically on a monthly basis throughout the lawsuit. The rents will remain in the court registry until conclusion of the foreclosure action.

To properly enforce the assignment of rents, the first thing lenders should do is record the assignment of rents in the public records of the county in which the real property is located. In the event the borrower defaults on their loan, the lender will have two options to enforce the assignment of rents: the actual assignment of rent to the lender (Section 697.07 (3)), or the sequestration of rents into the court registry (Section 697.07 (4)). If the lender is seeking the actual assignment of rent, the lender must send a written demand to the borrower to turn over the rent payments and provide proof of default. On the other hand, the lender may seek sequestration without proof of default or written demand. Showing the existence of an assignment of rents provision in the loan documents is sufficient to obtain sequestration of rents into the court registry.

Austin B. Calhoun, Esq.
Melissa G. Murrin, JD Candidate

E-3.2-11, Collecting Under an Assignment of Rents (08/12/2015)

The servicer must determine whether it is appropriate to pursue collections under the assignment of rents provision, taking into consideration mortgage insurer or guarantor requirements.

If the servicer pursues collections under an assignment of rents provision, it must ensure

local law allows the mortgagee to collect rents under these circumstances, and

this action will not create any new rights for the occupant that might impair Fannie Mae’s ability to foreclose the mortgage loan at a later date.

Rental income that is collected on a delinquent mortgage loan must be applied in accordance with the terms of the note and security instrument.

The following table provides the servicer with instructions when the mortgage loan is in foreclosure and the servicer is already collecting rental income.

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Copyright and Preface
A1-1-01, Application and Approval of Seller/Servicer
A1-1-02, Representation and Warranty Requirements
A1-1-03, Evaluating a Servicer’s Performance
A1-2-01, Servicer’s Termination of the Lender Contract
A1-2-02, Fannie Mae’s Termination of the Lender Contract without Cause
A1-3-01, Requirements for Voluntary Repurchase
A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations
A1-3-03, Repurchase Obligations Related to Bifurcated Mortgage Loans
A1-3-04, Reporting the Repurchase
A1-3-05, Redelivering a Mortgage Loan
A1-3-06, Automatic Reclassification of MBS Mortgage Loans
A1-4.1-01, Defining a Breach of Contract
A1-4.1-02, Fannie Mae’s Remedies
A1-4.2-01, Compensatory Fees Other Than Delays in the Liquidation Process
A1-4.2-02, Compensatory Fees for Delays in the Liquidation Process
A2-1-01, General Servicer Duties and Responsibilities
A2-1-02, Servicer’s Duties and Responsibilities Related to MBS Mortgage Loans
A2-1-03, Servicer's Duties and Responsibilities Related to Mortgage Loans with Resale Restrictions or Shared Equity Transactions
A2-1-04, Execution of Legal Documents
A2-1-05, Note Holder Status for Legal Proceedings Conducted in the Servicer’s Name
A2-1-06, Use of Fannie Mae Trademarks
A2-1-07, Subservicing
A2-1-08, First Lien Mortgage Loan Requirements
A2-1-09, Compliance with Requirements and Laws
A2-2-01, Refinance and Lending Practices
A2-3-01, Servicer Compensation
A2-3-02, Servicing Fees for Portfolio and MBS Mortgage Loans
A2-3-03, Yield Differential Adjustments
A2-3-04, Late Charges as Compensation
A2-3-05, Fees for Certain Servicing Activities
A2-3-06, Prepayment Premiums
A2-4-01, Quality Control Reviews
A2-5-01, Ownership and Retention of Individual Mortgage Loan Files and Records
A2-6-01, Custodial Documents
A2-7-01, Concurrent Servicing Transfers
A2-7-02, Pledge of Servicing Rights and Transfer of Interest in Servicing Income
A2-7-03, Post-Delivery Servicing Transfers
A2-8-01, Mortgage Electronic Registration System
A2-9-01, General Requirements
A2-9-02, Special Provision for Puerto Rico
A3-1-01, Maintaining Fannie Mae Seller/Servicer Status
A4-1-01, Staffing, Training, Procedures, and Quality Control Requirements
A4-1-02, Establishing Custodial Bank Accounts
A4-1-03, Addressing Borrower Inquiries and Disputes
A4-2.1-01, Preventing Defaults and Managing Delinquencies
A4-2.1-02, Property Inspection Vendor Management and Oversight
A4-2.1-03, Managing Short Sales
A4-2.1-04, Establishing Contact with the Borrower
A4-2.1-05, Requirements for Collection and Foreclosure Prevention Strategies Unique to Second Lien Mortgage Loans
A4-2.1-06, Adverse Action Notification Certification
A4-2.1-07, Servicer's Duties and Responsibilities Related to Mortgage Loans with an Outstanding Non-Interest-Bearing Balance
A4-2.2-01, Selecting and Retaining Law Firms
A4-2.2-02, Law Firm Management and Oversight
A4-2.2-03, Prohibition Against Servicer-Specified Vendors for Fannie Mae Referrals, Use of Vendors, and Outsourcing Companies
A4-2.2-04, Law Firm Suspensions, Matter Transfers, and Terminations
B-1-01, Administering an Escrow Account and Paying Expenses
B-2-01, Property Insurance Requirements Applicable to All Property Types
B-2-02, Property Insurance Requirements for One- to Four-Unit Properties
B-2-03, Master Property Insurance Requirements for Project Developments
B-2-04, Individual Property Insurance Requirements for Units in Project Developments
B-3-01, Flood Insurance Requirements Applicable to All Property Types
B-4-01, Additional Insurance Requirements
B-5-01, Insured Loss Events
B-5-02, Uninsured Loss Events
B-6-01, Lender-Placed Insurance Requirements
B-7-01, General Liability Insurance Requirements for Project Developments
B-7-02, Fidelity/Crime Insurance Requirements for Project Developments
B-8.1-01, Conventional Mortgage Insurance Servicer Responsibilities
B-8.1-02, Paying Conventional Mortgage Insurance Premiums
B-8.1-03, Replacing Conventional Mortgage Insurance Policies
B-8.1-04, Termination of Conventional Mortgage Insurance
B-8.2-01, FHA Mortgage Insurance Coverage Requirements
B-8.2-02, Conversion of FHA Coinsured Mortgage Loans to Full Insurance
B-8.2-03, Termination or Cancellation of FHA Mortgage Insurance and FHA Mortgage Insurance Premium
C-1.1-01, Servicer Responsibilities for Processing Mortgage Loan Payments
C-1.1-02, Processing Payment Shortages or Funds Received When a Mortgage Loan Modification Is Pending
C-1.1-03, Automatically Drafting Payments from the Borrower’s Bank Account
C-1.1-04, Accepting Biweekly Payments from Third-Party Payment Contractors
C-1.2-01, Processing Additional Principal Payments
C-1.2-02, Processing Short Sale Proceeds
C-1.2-03, Processing Payments in Full
C-1.2-04, Satisfying the Mortgage Loan and Releasing the Lien
C-1.2-05, Charging for a Release of Lien
C-2.1-01, Responsibilities for ARM Loan Servicing
C-2.1-02, Notifying the Borrower Regarding Interest Rate and/or Payment Changes
C-2.2-01, Identifying and Disclosing Adjustment Errors
C-2.2-02, Assuming Responsibility for Conversion Notice Errors
C-2.2-03, Determining Whether to Provide a Refund or Credit for Overcharges
C-2.3-01, Processing ARM Conversions to Fixed Rate Mortgage Loans
C-2.3-02, Notifying Fannie Mae of Conversions for Portfolio Mortgage Loans
C-2.3-03, Repurchasing Converted MBS Mortgage Loans and Redelivering Them to Fannie Mae
C-3-01, Responsibilities Related to Remitting P&I Funds to Fannie Mae
C-3-02, Remitting Payoff Proceeds
C-4.1-01, Notifying Credit Repositories
C-4.2-01, Filing IRS Forms
C-4.3-01, Servicer Responsibilities Related to Investor Reporting
D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan
D1-1-02, Evaluating a First Lien Mortgage Loan for Charge-Off and Release of Lien
D1-1-03, Evaluating a Second Lien Consideration of a Second Lien Mortgage Loan
D1-2-01, Renovation Mortgage Loans
D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower
D1-4.1-01, Determining Whether a Transfer of Ownership Is Permitted
D1-4.1-02, Allowable Exemptions Due to the Type of Transfer
D1-4.1-03, Allowable Exceptions Due to State Law Restrictions (“Window-Period” Mortgage Loans)
D1-4.1-04, Transfers of Ownership by Grant Deed
D1-4.1-05, Enforcing the Due-on-Sale (or Due-on-Transfer) Provision
D1-4.2-01, Conventional Mortgage Loans that Do Not Include a Due-on-Sale (or Due-on-Transfer) Provision
D1-4.2-02, Conventional Mortgage Loans That Include a Due- on-Sale (or Due-on-Transfer) Provision
D1-4.3-01, Transfers of Ownership on FHA and VA Mortgage Loans
D1-4.3-02, Transfers of Ownership on RD Mortgage Loans
D1-5-01, Call Options and Cross-Default Provisions
D1-6-01, Requesting to Waive Certain Rights under the Mortgage Loan
D1-6-02, Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest
D1-6-03, Handling Property Forfeitures and Seizures
D2-1-01, Determining if the Borrower’s Mortgage Payment is in Imminent Default
D2-2-01, Achieving Quality Right Party Contact with a Borrower
D2-2-02, Outbound Contact Attempt Requirements
D2-2-03, Sending a Payment Reminder Notice
D2-2-04, Sending a Borrower a Solicitation Package for a Workout Option
D2-2-05, Receiving a Borrower Response Package
D2-2-06, Sending a Breach or Acceleration Letter
D2-2-07, Resolving an Appeal of a Mortgage Loan Modification Trial Period Plan Denial for a Principal Residence
D2-2-08, Interviewing Face-to-Face with a Borrower for Certain FHA and HUD Mortgage Loans
D2-2-09, Additional Borrower Contact Requirements for the Servicer of a Second Lien Mortgage Loan
D2-2-10, Requirements for Performing Property Inspections
D2-3.1-01, Determining the Appropriate Workout Option
D2-3.1-02, Conditions of a First and Second Lien Mortgage Loan Modification for an MBS Mortgage Loan
D2-3.1-03, Working with a Borrower that has a Group Home Mortgage Loan
D2-3.1-04, Offering a Workout Option When Also Servicing a Subordinate Lien Mortgage Loan
D2-3.1-05, Interacting with Mortgage Assistance Fund Program Providers
D2-3.1-06, Notifying Fannie Mae of Lead-Based Paint Citations
D2-3.2-01, Forbearance Plan
D2-3.2-02, Repayment Plan
D2-3.2-03, Government Mortgage Loan Modifications
D2-3.2-04, Payment Deferral
D2-3.2-05, Disaster Payment Deferral
D2-3.2-06, Fannie Mae Flex Modification
D2-3.3-01, Fannie Mae Short Sale
D2-3.3-02, Fannie Mae Mortgage Release (Deed-in-Lieu of Foreclosure)
D2-3.4-01, Military Indulgence
D2-3.4-02, Offering a Mortgage Release (Deed-in-Lieu of Foreclosure) for a Second Lien Mortgage Loan
D2-3.4-03, Assignment of a Mortgage Loan to the Insurer or Guarantor
D2-3.4-04, Qualifying Mortgage Assumption Workout Option
D2-4-01, Reporting a Delinquent Mortgage Loan to Fannie Mae
D2-4-02, Reporting a Workout Option to Fannie Mae
D2-4-03, Reporting Certain Workout Options to Treasury
E-1.1-01, General Requirements for Referring a Mortgage Loan to a Law Firm
E-1.1-02, Required Referral Documents
E-1.1-03, Required Referral Data
E-1.2-01, Timing of the Bankruptcy Referral
E-1.2-02, Timing of the Foreclosure Referral for Mortgage Loans Generally
E-1.2-03, Timing of the Foreclosure Referral for Second Lien Conventional Mortgage Loans Not Secured by a Principal Residence
E-1.2-04, Timing of the Foreclosure Referral for Government Mortgage Loans
E-1.3-01, General Servicer Responsibilities for Non-Routine Matters
E-1.3-02, Reporting Non-Routine Litigation to Fannie Mae
E-1.3-03, Reporting “Legal Filings” to MERS
E-2.1-01, General Servicing Requirements for Mortgage Loans Under Bankruptcy Protection
E-2.1-02, Confirming Bankruptcy Information
E-2.1-03, Suspending Debt Collection Efforts
E-2.1-04, Expected Servicer/Attorney Interaction During Bankruptcy Proceedings
E-2.1-05, Filing a Notice of Appearance and Sending Proper Notices
E-2.1-06, Reviewing Bankruptcy Reorganization Plans
E-2.1-07, Preparing and Filing a Proof of Claim
E-2.1-08, Monitoring Borrower Payments and Critical Dates
E-2.1-09, Identifying Workout Opportunities
E-2.1-10, Dealing with Delays in the Bankruptcy Process
E-2.1-11, Remitting P&I for MBS Mortgage Loans That Are Part of a Bankruptcy
E-2.2-01, Managing Chapter 7 Bankruptcies
E-2.2-02, Managing Chapter 11 Bankruptcies
E-2.2-03, Managing Chapter 12 Bankruptcies
E-2.2-04, Managing Chapter 13 Bankruptcies
E-2.3-01, Identifying Abusive Filers
E-2.3-02, Addressing Individuals with Fractional Interests in a Security Property
E-2.3-03, Handling Cramdowns of the Mortgage Debt
E-2.3-04, Bankruptcies Involving Mortgage Loans Secured by Investment Properties
E-2.3-05, Bankruptcies Involving Multiple Fannie Mae Mortgage Loans
E-2.3-06, Responding to Bankruptcies Identified After Foreclosure Sale
E-2.3-07, Cross-Border Insolvency Proceedings
E-3.1-01, General Servicing Requirements Related to Foreclosure Proceedings
E-3.1-02, Performing Due Diligence Prior to Considering Foreclosure
E-3.1-03, Fannie Mae Address for Instruments of Record
E-3.1-04, Addressing a Bankruptcy Filed During Active Foreclosure
E-3.2-01, Conducting Prereferral Review
E-3.2-02, Initiating Foreclosure Proceedings on a First Lien Conventional Mortgage Loan
E-3.2-03, Initiating Foreclosure Proceedings on a Second Lien Conventional Mortgage Loan
E-3.2-04, Postponing Foreclosure Referral for Mortgage Loans Not Secured by a Principal Residence
E-3.2-05, Expected Servicer/Attorney Interaction During Foreclosure Proceedings
E-3.2-06, Conducting Borrower Outreach During Foreclosure
E-3.2-07, Impact of Engagement with a Mortgage Assistance Fund Program Provider
E-3.2-08, Processing Reinstatements During Foreclosure
E-3.2-09, Conducting Foreclosure Proceedings
E-3.2-10, Paying Certain Expenses During the Foreclosure Process
E-3.2-11, Collecting Under an Assignment of Rents
E-3.2-12, Performing Property Preservation During Foreclosure Proceedings
E-3.2-13, Addressing Title Defects Generally
E-3.2-14, Addressing Title Defects for Bifurcated Mortgage Loans
E-3.2-15, Allowable Time Frames for Completing Foreclosure
E-3.3-01, Completing Preforeclosure Sale Review
E-3.3-02, Certifying the Status of Workout Negotiations Prior to Foreclosure Sale
E-3.3-03, Inspecting Properties Prior to Foreclosure Sale
E-3.3-04, Marketing the Foreclosure Sale and Using Foreclosure Auction Services
E-3.3-05, Issuing Bidding Instructions
E-3.3-06, Handling a Suspension or Reduction of the Redemption Period
E-3.3-07, Pursuing a Deficiency Judgment
E-3.4-01, Suspending Foreclosure Proceedings for Workout Negotiations
E-3.4-02, Canceling the Foreclosure Sale for a Completed Workout
E-3.5-01, Foreclosure of a Property Securing an MBS Mortgage Loan
E-3.5-02, Handling Third-Party Sales
E-3.5-03, Providing Evidence of Title
E-4.1-01, Notifying Fannie Mae of an Acquired Property
E-4.1-02, Eliminations and Rescissions of Foreclosure Sales
E-4.2-01, Completing Conveyance Documents
E-4.2-02, Handling Reconveyance to the Insurer or Guarantor
E-4.3-01, Managing the Property Post-Foreclosure Sale
E-4.3-02, Inspecting Properties Post-Foreclosure Sale
E-4.3-03, The Broker's, Agent's, or Property Management Company's Responsibilities
E-4.3-04, Handling Eviction Proceedings
E-4.4-01, Continuing or Canceling Property Insurance Coverage
E-4.4-02, Remitting Property Insurance Settlement Proceeds or Unearned Premium Refunds
E-4.4-03, Canceling Flood Insurance Coverage for Acquired Properties
E-4.4-04, Remitting Flood Insurance Settlement Proceeds or Unearned Premium Refunds
E-4.5-01, Filing MI Claims for Conventional Mortgage Loans or for Other Mortgage Loans for which Fannie Mae Bears the Risk of Loss
E-4.5-02, Filing MI Claims for FHA Mortgage Loans
E-4.5-03, Filing MI Claims for FHA Coinsured Mortgage Loans
E-4.5-04, Filing MI Claims for FHA Title I Loans
E-4.5-05, Filing MI Claims for HUD Section 184 Mortgage Loans
E-4.5-06, Filing MI Claims for VA Mortgage Loans
E-4.5-07, Filing MI Claims for RD Mortgage Loans
E-5-01, Requesting Reimbursement for Expenses
E-5-02, Servicer Responsibilities Prior to Requesting Reimbursement of Attorney Fees and Costs
E-5-03, Allowable Bankruptcy Fees
E-5-04, Allowable Foreclosure Fees
E-5-05, Reimbursing Law Firms/Reimbursement of Uncollected Fees, Costs or Advances
E-5-06, Technology Fees and Electronic Invoicing
E-5-07, Other Reimbursable Default-Related Legal Expenses
F-1-01, Servicing ARM Loans
F-1-02, Escrow, Taxes, Assessments, and Insurance
F-1-03, Establishing and Implementing Custodial Accounts
F-1-04, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan
F-1-05, Expense Reimbursement
F-1-06, Filing an MI Claim for a Liquidated Mortgage Loan or Acquired Property
F-1-07, Handling Property Forfeitures and Seizures
F-1-08, Managing Foreclosure Proceedings
F-1-09, Processing Mortgage Loan Payments and Payoffs
F-1-10, Obtaining and Executing Legal Documents
F-1-11, Post-Delivery Servicing Transfers
F-1-12, Preparing to Implement a Workout Option
F-1-13, Processing a Fannie Mae Mortgage Release (Deed-In-Lieu of Foreclosure)
F-1-14, Processing a Fannie Mae Short Sale
F-1-15, Processing a Government Mortgage Loan Modification
F-1-16, Processing a Repayment Plan
F-1-17, Processing a Transfer of Ownership
F-1-18, Processing a Workout Incentive Fee
F-1-19, Processing a Military Indulgence
F-1-20, Remitting and Accounting to Fannie Mae
F-1-21, Reporting a Delinquent Mortgage Loan via Fannie Mae’s Servicing Solutions System
F-1-22, Reporting a Workout Option via Fannie Mae’s Servicing Solutions System
F-1-23, Reporting to Third Parties
F-1-24, Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System
F-1-25, Reclassifying or Voluntary Repurchasing an MBS Mortgage Loan
F-1-26, Servicing eMortgages
F-1-27, Processing a Fannie Mae Flex Modification
F-1-28, Reviewing a Transfer of Ownership for Credit and Financial Capacity
F-2-01, Bankruptcy Referral and Completion Timelines
F-2-02, Incentive Fees for Workout Options
F-2-03, Compensatory Fee Calculation Examples
F-2-04, Firm Minimum Requirements
F-2-05, Historical Yield Differential Adjustment Provisions
F-2-06, Mortgage Insurer Delegations for Workout Options
F-2-07, Reporting the Principal Amount for Mortgage Loans with Principal Forbearance
F-2-08, Servicing Fees for MBS Mortgage Loans
F-2-09, Servicing Fees for Portfolio Mortgage Loans
F-2-10, Fannie Mae’s Workout Hierarchy
F-3-01, Acronyms and Glossary of Defined Terms: A
F-3-02, Acronyms and Glossary of Defined Terms: B
F-3-03, Acronyms and Glossary of Defined Terms: C
F-3-04, Acronyms and Glossary of Defined Terms: D
F-3-05, Acronyms and Glossary of Defined Terms: E
F-3-06, Acronyms and Glossary of Defined Terms: F
F-3-07, Acronyms and Glossary of Defined Terms: G
F-3-08, Acronyms and Glossary of Defined Terms: H
F-3-09, Acronyms and Glossary of Defined Terms: I
F-3-10, Acronyms and Glossary of Defined Terms: J
F-3-11, Acronyms and Glossary of Defined Terms: K
F-3-12, Acronyms and Glossary of Defined Terms: L
F-3-13, Acronyms and Glossary of Defined Terms: M
F-3-14, Acronyms and Glossary of Defined Terms: N
F-3-15, Acronyms and Glossary of Defined Terms: O
F-3-16, Acronyms and Glossary of Defined Terms: P
F-3-17, Acronyms and Glossary of Defined Terms: Q
F-3-18, Acronyms and Glossary of Defined Terms: R
F-3-19, Acronyms and Glossary of Defined Terms: S
F-3-20, Acronyms and Glossary of Defined Terms: T
F-3-21, Acronyms and Glossary of Defined Terms: U
F-3-22, Acronyms and Glossary of Defined Terms: V
F-3-23, Acronyms and Glossary of Defined Terms: W
F-3-24, Acronyms and Glossary of Defined Terms: X
F-3-25, Acronyms and Glossary of Defined Terms: Y
F-3-26, Acronyms and Glossary of Defined Terms: Z
F-4-01, References to Fannie Mae's Website
F-4-02, List of Contacts
F-4-03, List of Lender Contracts

Estate Planning & Probate

Assignment of Rents & Leases

Assignment of rents and leases in business and real estate transactions.

An “Assignment of Rents and Leases” is a crucial legal instrument that significantly impacts commercial and residential real estate, and mergers and acquisitions of real estate. Having a properly drafted and executed assignment means the rights and assets that are transferred give the new party (the assignee) the right to receive payments.

What is an assignment of rents and leases?

An assignment of rents and leases is a legal agreement in which the individual or company entitled to receive payments transfers that right to another party. Most often, this occurs (1) when a property owner hires a property manager, or (2) in acquisitions, such as a property management company selling their accounts to another property management company or a commercial landlord selling their portfolio to a buyer.

How is an assignment of rents and leases used?

This arrangement is often utilized in business sales, account sales, financing, and investment transactions as a means of securing debt or protecting the interests of the lender or property owner.

In the financing context, an assignment often grants the lender or assignee the authority to collect and apply the rents from the property should the borrower default on their loan; this is important when the borrower collateralizes real estate in order to receive the loan. In a property management context, an assignment often serves to effectively transfer management rights to the new company.

An assignment of rents and leases is probably most commonly used in a commercial real estate context when there is a sale of a commercial property, or in the residential real estate context when there is a change in property managers.

What terms should be included in an assignment of rents and leases?

Certain components should be included in a proper assignment. Here are a few of the foundational terms for an assignment of rents and leases:

Parties. All parties should be clearly identified and defined. This can include the borrower, lender, assignee, assignor, successor, etc.
Property description. The real estate parcel(s) involved in the assignment should be described by legal description, street address, and more.
Lease terms, rents, and disclosures. The actual lease agreements that are being transferred to the new landlord, property manager, lender, etc. should be provided to the assignor/successor, along with an easy-to-read schedule of rents and other crucial details per parcel or premises.
Rights and obligations. Each party should have their rules, permissions, and contractual rights and obligations outlined in the assignment language. The rights and obligations of each stakeholder will be widely varied based on the needs and financial position of each party, the existing leases being assigned, and the specifics of the subject properties.

Best Commercial Real Estate Attorneys in Oklahoma

It is crucial to engage an attorney with experience in properly negotiating, drafting, and executing assignments of rents and leases. They can guide you through the process, ensuring that the assignment is tailored to your specific needs and complies with all relevant legal requirements. The attorneys of Avenue Legal Group have the experience you need and want in your transaction. Contact our firm to discuss your transaction, assignment of rents and leases, or other real estate documentation.

Looking for local counsel in Oklahoma for your commercial real estate transaction? Our firm frequently works with attorneys, investors, and lenders from outside the state. Contact us by call, text, email, or website submission to discuss your matter.

Other helpful information:

Commercial Real Estate Transactions in Oklahoma
Due Diligence in Oklahoma Real Estate Transactions
Essential Terms for Every Commercial Lease
Attorney for Real Estate Contract Review
Estate Planning
Real Estate and Investing

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