Who Has Your Rents?

Who has your rents is a question you might ask if they vanish, and you have been missing your Note payments.

Do you recall sitting at the Closing Table when you bought and financed your rental investment property?

I’m sure you do, it’s something we never forget.

And you were concerned with getting that Deed that will put the property into your name, and signing that Mortgage allowing you to use the Lender’s money to buy the property.

But you signed a lot of documents that day, most of them from the Lender, and you felt like you could not question any of them because you had no other choice.

So you probably did not bother to read or discuss each one, just assuming that’s the way it has to be.

Well, now I want you to think about one of those documents.

It is called an “Assignment of Rents.”

The Assignment of Rents gives the Lender the legal right to receive rent payments directly from the tenant, just by filing the document that you signed in the County Real Property Records, and then sending a copy to the tenant with instructions on where to mail the check.


When a Real Estate Investor, like you, gets a loan on a rental property, you will sign a number of legal documents, whether the transaction is a purchase or a refinance.

Depending on the State in which you live, these documents will be called differed things, such as Real Estate Lien Note, Promissory Note, Mortgage, Deed of Trust, or something else.

At least one of them will “create a lien” on your property, meaning the Lender has a claim on your property until certain conditions are satisfied.

The lien documents will be filed “of record” in the Real Property Records of the County in which the property is located.

And you will also sign another document called an “Assignment of Rents” which will not be filed of records along with the other documents.

The Assignment of Rents will be kept by the Lender in the Loan file, to be used if required.

With this document, the Borrower assigns his right to receive the rents from the tenants of his rental properties, to the Lender.

The purpose of the document is to protect the Lender in case the investors stops making payments on the Note, but keeps receiving the rents.

The Lender can then start receiving the rents and applying them to the Note payments.


The Assignment of Rents document will describe the circumstances under which the Lender is permitted to take the document out of the Loan file folder and file it in the County Real Property Records, and begin collecting the rents.

And it does not have to be just when the Mortgage is in default.

It can be another event, such as the Borrower being a total of 60 days late in making timely payments.

Whatever the triggering event, when it occurs, the Lender files the Assignment of Rents in the Real Property Records, and then has the Clerk make Certified Copies.

Then the Lender sends a Certified Copy to each tenant, and instructs the tenant to begin making monthly payments to the Lender instead of to the Owner.

If you are the Owner/Borrower, this can present a major problem for you.

That’s because the rent payments are the income that you are using to pay all of the expenses of operating the property, not just the Mortgage payments.

Actually, you probably made the Note payment with the money that you had left over after paying all of the expenses of operation.

But now, after the rent assignment, you still have all of those expenses of operation, plus the Note payment, but none of the income.

But the question you should have is what you should do.


There are two things that you should do.

First, look very carefully at the language in the Assignment of Rents document.

If it is just a “boiler-plate” general document, or gives the Lender too much power, you can try to negotiate the terms.

If the Lender refuses, negotiate a different arrangement, such as maintaining an escrow account of three to six monthly payments, from which Note payments will be made in the event that you miss one, before the Assignment of Rents kicks in.

(You should have such a reserve, anyway).

Second, know what is in the document, and be very careful that you don’t do anything that will allow it to be filed, even if you have to use money designated for other expenses.

The Assignment of Rents document is just part of the Real Estate Investing business, but you should be aware that it exists, and before Closing you should try to negotiate the terms, or provide for a different arrangement.


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I touch on this same concept in more than one of my books, but the one with the most detailed information is “Do This, Not That!”  If you would like to preview it, you can go here on this website to look at it first, use the 3D Flip Reader to look at the Contents and read the first few chapters.

The paperback is available on my Amazon Author Page, along with my other books.

And I have related Articles about real estate investing and other real estate matters from other perspectives on my LinkedIn Page.

I am also active on Quora.com where I have answered over 300 questions, and they have almost 3 Million views.

If you happen to be doing, or if you are considering doing, a Section 1031 Like Kind Exchange, then you should start with a Dictionary, and I have done one, in 3 separate Blog Posts here: Part 1, Part 2, and Part 3.  And I have a lot of material for you to consider on my S1031 Exchange website.

You should always check out the credentials of anyone, like myself, who you are relying on for accurate information by looking closely at their Biography.  Here’s mine.

And if you think you might like to read one of my books, but can’t decide which one, here are four that I recommend.

assignment of rents



I am an Attorney licensed to practice in Texas, North Carolina, Virginia, and the District of Columbia.  But I am not your Attorney.  I would be honored if I were, but I am not.  Reading this Blog does not created an attorney-client relationship between us.  Internet content should not be used as a substitute for the advice of a competent Attorney admitted or authorized to practice law in your state or jurisdiction.


August 2, 2022



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