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Assignment Of Rents By Lessor

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					Assignment Of Rents By Lessor
Rental payments due under a valid lease are an asset to the property
owner, and are his or hers to sell, trade, or even give away.
They can also be 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. Thus the lender has the added security of knowing
that as long as rents are paid in accordance with the lease, he will be
paid as well.
An assignment 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
need 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? 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 per cent 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. They are not only an unprofessional way to conduct business,
they are 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,
free, 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 with
regard to 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.
A reliable Free form may be accessed on line from Free and Low Cost Real
Estate Forms
Toby Katz is a re-tired broker of 25 years now enjoying the good life and
offering Free and Low Cost Real Estate Forms at http://kaktus.com


				
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posted:10/21/2010
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