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Mng2601 Assignment Of Rents

LPL4801 The Law of Sale and Lease – Semester 1


LPL4801 The Law of Sale and Lease

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    • LPL4801_Alpha_Trust_(Edms)_Bpk_v_Van_der_Watt.pdf
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    • LPL4801_De_Jager_v_Sisana.pdf
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    • LPL4801_alpha_trust_edms_bpk_vs_van_der_watt_summary.pdf
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  • Notes
    • LPL4801_Huur & Koop opsommings.doc
    • LPL4801_determination_of_price_by_3rd_party.pdf
    • LPL4801_emptio_rei_speratae.pdf
    • LPL4801_emptio_spei,_ad_mensuram_&_per_quantitatem.pdf
    • LPL4801_law_of_sale_study_unit1.pdf
    • LPL4801_study_unit_2_law_od_sale.pdf
    • LPL4801_study_unit_4_the_duty_of_custody.pdf
    • LPL4801_study_unti_3_the_cooling_off_right.doc
    • LPL4801_the_variation_&_revival_of_deeds_of_alienation.pdf
    • LPL4801_types_of_contracts_of_sale.pdf
    • LPL4801_unreasonable_price_fixed_by_3rd_party.pdf
    • Sales & Lease Study Units 1 - 6 & 10
      • LPL4801_sale_&_lease_study_unit_1.pdf
      • LPL4801_sale_&_lease_study_unit_10.pdf
      • LPL4801_sale_&_lease_study_unit_2.pdf
      • LPL4801_sale_&_lease_study_unit_3.pdf
      • LPL4801_sale_&_lease_study_unit_4-5.pdf
      • LPL4801_sale_&_lease_study_unit_6.pdf
  • Solutions
    • LPL4801_mayjune2010_answer_to_long_question_1.pdf
    • LPL4801_octnov2010_answer_to_long_question_1_&_3.pdf
    • LPL4801_octnov2010_answer_to_long_question_2.pdf


LPL4801 The Law of Sale and Lease equips students with knowledge of, and insight into the law of sale and lease.

Resources for LPL4801-LPL4018 The Law of Sale and Lease

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A deed of trust with assignment of rents is the document that underlies the loan on a rental property. The lender's security interest in the property gets created by the deed of trust. The assignment of rents puts teeth in the lender's security interest by giving it the right to collect rents.

The Deed of Trust

Most loans in California are securitized by deeds of trust instead of mortgages. When you take out a loan, you sign a promissory note. The note is a private business arrangement between you and the lender. The deed of trust sets up an arrangement by which the actual ownership of your property sits with an impartial third party, called a trustee. If you, as trustor, fulfill your obligations under the note, the trustee will transfer the deed to you. If you don't, the lender, or beneficiary, can have the trustee transfer ownership of the property to itself.

Assignment of Rents

The assignment of rents clause in the deed of trust gives the lender the right to collect any rents that the property generates if you don't make your loan payments. Having an assignment of rents clause is important for the lender. Leases are technically agreements between you and your tenants. Without your permission, your lender might be unable to collect the rents from the tenants.

Deed of Trust vs. Mortgage

Deeds of trust are differnet from mortgages in one key way. Mortgages have two parties -- you and your lender. Deeds of trust have a third party sitting in the middle. Because of this, foreclosing is much easier. California trust deeds typically do not have a period of redemption, making it possible for your lender to complete the foreclosure process in just a few months.


If you don't want to give your lender a security interest in your property and in your rental income stream, you probably won't be able to use its money to buy the property. You can buy the property with all-cash. Alternately, you could take out unsecured financing, such as a line of credit, or take out financing secured by a different asset.

About the Author

Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.

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