Assignment of Leases and Rents
(TX)

Summary

This is an assignment of leases and rents template wherein the borrower either conditionally or unconditionally assigns its interest in the leases, rents, and profits in the designated premises to the lender as security for the loan in the state of Texas. This template includes practical guidance and drafting notes. This assignment is usually contained within the deed of trust but is also often evidenced by a separate security document given to the lender. It generally includes leasing covenants or restrictions identical to those contained in the deed of trust and may also include, for the borrower's benefit, a form of exculpation clause. Because an assignment of leases and rents effectively creates an interest in real property that is being conveyed to the lender, the document can and should be recorded in the office of the county clerk in the county in which the underlying property is located. When an assignment of leases and rents is included with or as an exhibit to the deed of trust, it will be recorded as part of the deed of trust. A properly recorded assignment of leases and rents will provide constructive notice of the assignment with the same force and effect as any other properly recorded conveyance of an interest in real property. Furthermore, proper recordation will perfect the interest conveyed by the assignment of leases and rents at the time of recordation, even if the rights included in the conveyance are conditioned upon the occurrence of future events, such as an event of default under the loan documents. See Tex. Prop. Code §§ 64.051 through 64.062. See also Tex. Prop. Code § 12.009. This instrument presumes that the assignor/borrower is a corporation. The references to corporate entities and organizational documents should be modified as may be needed to reflect the actual nature of the parties and entities involved in the loan transaction. This template is governed by the laws of Texas. For further guidance on assignment of leases and rents, see Assignment of Leases and Rents in a Commercial Real Estate Loan Transaction and Commercial Real Estate Acquisition Loan Resource Kit (TX).