Tenant Direction Letter

Summary

This template for a tenant direction letter is to be sent by the owner of commercial real property to each of its tenants. This template directs the tenant to pay rent directly to a lock box at a bank designated by the owner's lender pursuant to a mortgage, assignment of leases and rents, and security agreement (security documents). This template includes practical guidance and drafting notes. The security documents assign and grant a security interest in rents from the real property, and require that the owner / borrower direct the tenant to pay rent to a lock box at a bank designated by the lender. Wiring instructions for the lockbox account are provided in the letter and the letter is revocable only by the lender. The letter is typically set forth as an exhibit to the security documents or a cash management agreement, and must be sent in the form set forth on the exhibit, and executed by the tenant. This template is favorable to the lender. For a full listing of key content covering construction, see Commercial Real Estate Acquisition Loan Resource Kit. For a full listing of key content covering acquisition financing, see Junior Associate Real Estate Resource Kit (Acquisition Finance). For further guidance about the collateral assignment of leases and rents, see Assignment of Leases and Rents in a Commercial Real Estate Loan Transaction. For a cash management agreement template, see Cash Management Agreement.