Assignment of Rents

Assignment of Rents by Lessor is a valid tool and has many uses.

Rent Assignment

Rental payments due under a valid lease are an asset to the property owner. This valuable asset may be sold, traded, given away or used to satisfy a debt.

A lender gains an added measure of security when accepting lease payments as payment on debt owned by a property owner.
The assignment of rents could become the factor that makes the loan possible when other requirements are marginal.
Assigned lease payments go directly from the tenant to the lender.

An ASSIGNMENT OF RENTS BY LESSOR could also be the factor that prevents foreclosure if the property owner has gotten into financial difficulties

The added security comes from the lender “owning” and directly receiving payments from the lease in addition to the personal guarantee from the borrower.

The other reason to use ASSIGNMENT OF RENTS BY LESSOR is to “sell” a set number of rental income payments.

Why would you consider selling your rental income? To obtain an immediate lump sum of cash. Perhaps you have come across another opportunity and needed more money in order to take advantage of it.
For instance, you might need a down payment to purchase another rental property.

Why would you consider purchasing someone Else’s rental payments? You might want to make an investment because you have a large sum of cash on hand and want it to earn money.
You might negotiate a price that will bring you a higher percent return on your investment than you are getting in other places.
Maybe you don’t trust the stock market but love real estate. Purchasing lease payments is a good way to earn real estate income without the headache of being a landlord.

Verbal agreements indicate a high level of trust between the parties, and you may be tempted to use one when dealing with a friend or relative.
Reconsider this idea because it’s not only an unprofessional way to conduct business, but a highly effective way to end a friendship or business relationship.
The rights and obligations of each party may become fuzzy over time, and misunderstandings due to faulty memory can escalate into bitterness or lawsuits.
A lender wouldn’t consider conducting business without written agreements, and neither should you.

Instead, use the ASSIGNMENT OF RENTS BY LESSOR form. It’s fast, easy, and will clarify the agreement between you.

This form clarifies the financial details as well as the duties of the property owner to continue his or her responsibility to the tenants concerning maintenance, etc.
It also sets forth the property owner’s obligation of repayment to the lender or buyer should the tenant default on lease payments.




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