Understand How Legal Documents Work

• 1). Gain an understanding of how contracts work. Technically, an Assignment of Rents is a legal document and a contract. Its typical usage is that it is attached to a mortgage or deed on a property, and assigns---without the need for additional legal steps---the rents collected on a property to the lender or bank. The Assignment is typically not recorded in the property court records unless it is attached to a deed. The Assignment itself can be a full separate document, or just a written clause in the text of the deed itself.
  
  
• 2). Learn the terminology associated with an Assignment of Rents. Words like "lessor," "lessee," "assignor" and "assignee" can be confusing if you do not understand which is which and what their legal standings are in a court of law.
  
  
• 3). Understand that the rents collected is leverage (bargaining power) when negotiating a deal or a bank loan of any kind. It has a value in terms of dollars and cents.
  
  

Parts of an Assignment of Rents and Its Verbiage

• 1). Understand the parts of an Assignment of Rents. The opening clause begins by establishing the nature of the document and which parties are making the agreement, as well as the date the agreement is made.
  
  
• 2). The next clause of an Assignment of Rents should state the nature of the actual conveyancing document, meaning the promissory note, mortgage or deed of trust. State how the document gives the lender right and title to the property.
  
  
• 3). Make a brief statement about the right and entitlement of the homeowner to the rents and leases collected on the property.
  
  
• 4). Include a legal description of the property on which the Assignment is being taken. A legal description is a descriptive statement of the boundaries of the property, i.e., what the owner actually owns.
  
  
• 5). Include a sentence making the statement that you are, in fact, assigning your right and title to ownership of the rents being collected from your tenants.
  
  
• 6). Outline, in detail, what the Assignment includes and what it does not include.
  
  
• 7). Provide a place for the assignor and assignee to sign the legal document. You may view an example of an actual Assignment of Rents at ablelegalforms.com.