Assignment of Rent Clauses–What, Why, When and How?

Written by: on Monday, October, 15th, 2012

What if an owner was delinquent in assessments and without filing a lawsuit and obtaining a judgment you could require the tenant living in the owner’s unit to pay the rent to the association instead of the owner to satisfy back assessments?  Sound too good to be true?  It isn’t!  It can be done, but only if your association has an assignment of rents provision in its declaration.

Assignment of rent provisions are very common in commercial situations and are becoming more common in association documents.  The provision allows associations to intercept rents from a tenant to offset outstanding amounts due from an owner, after giving appropriate notice. Once the tool is in place associations need to be careful about when and how they use it because interception of rents may result in missed mortgage payments by the owner and ultimately foreclosure by a first mortgage holder.  A foreclosure might then jeopardize the association’s recovery of all amounts due.  If you’d like more information on amending your documents to include such a provision check out this article.

Loura K. Sanchez