Posted by Nate(DC) on November 07, 2002 at 14:33:20:
Sounds like a good idea to me. I find that random thoughts late at night are often the most lucid.
Take care,
NT
Assigning “Assignment of Rents” doc - Posted by Kristine-CA
Posted by Kristine-CA on November 06, 2002 at 21:25:49:
Greetings. I’ve been working on purchasing a property that has been abandoned (and is tax-defaulted) by purchasing the deed of trust (mortgage) from the previous sellers who “took back” the property a couple of years ago. Because the owners let the taxes go for five years, the holders of the trust deed do not want to spend what it would take to legally foreclose–in this case a trustee’s sale–to redeem the property. Not to mention wanting to wash their hands of the property.
As the holders of the trust deed did not foreclose, the only thing they own to sell is the deed of trust. I offered to buy the mortgage from them for a consideration and they are interested. In this instance, they would assign the deed of trust to me. However, when the original trust deed was executed an “assignment of rent” was also executed. In this case the borrowers assigned the rents to the lender. I assume that this was so the holder of the deed of trust could collect rent(s) as part of the payments towards the deed of trust amount. Correct me if I am wrong here. I see these assignments of rent all the time in my research but don’t really understand them very well.
Do I need the sellers of the deed of trust to assign me the rent assignment as well? That way I control the mortgage and any income on the property? There isn’t any income (it’s a duplex) as the property is vacant and has been abandoned by the previous owners. It is my intent to foreclose or get a deed of lieu of foreclosure from the owners after I buy the mortgage.
I realize this is a legal question, but would appreciate any feedback about whether the assignment of rents is something I should be concerned about. I’ve never seen one show up on a title report and am wondering if it just dies or if it’s something that needs to be closed in some way.
Thanks, Kristine
Re: Assigning “Assignment of Rents” doc - Posted by James Buster
Posted by James Buster on November 07, 2002 at 18:18:48:
If the assignment of rents is part of the note, buying the note should give you the right to such assignment. Having it as a separate document is odd. It is usually included in a note’s original terms.
Re: Assigning “Assignment of Rents” doc - Posted by Nate(DC)
Posted by Nate(DC) on November 06, 2002 at 23:11:58:
It’s basically there as additional security, so that if the owner were to collect rent and not pay the mortgage, they could be liable for paying the rent back to the lender…or if the lender finds the place vacant and takes possession, they can collect rent and apply it to the loan balance.
I would recommend that you have the lender assign the “assignment of rents” to you, as otherwise the rents are still assigned to the lender, and you don’t want to be in that position.
NT
Re: Assigning “Assignment of Rents” doc - Posted by Jim FL
Posted by Jim FL on November 07, 2002 at 01:44:40:
Nate,
I’m certainly no lawyer, and have never bought a mortgage or trust deed with an assignment of rent form seperate.
It was usually included in the mortgage language.
But, in addition to getting the assignment, as you suggest, and I agree with, what about getting a limited power of attorney as well, for any dealings with the deed of trust and/or the property or interest the lender may have in it?
Seems this might help if rents were to be collected for some reason.
Since the place is vacant, I don’t really see this as any concern immediately however.
Perhaps Kristine could check to see if this “Assignment of rents” is an addendum to the mortgage? or a document all its own?
Just my random thoughts late at night,
Jim FL