They can also be used to satisfy a debt.

A lender gains an added measure of security when accepting lease payments as payment on debt owned by a property owner. The assignment of rents could become the factor that makes the loan possible when other requirements are marginal. Assigned lease payments go directly from the tenant to the lender. Thus the lender has the added security of knowing that as long as rents are paid in accordance with the lease, he will be paid as well.

An assignment could also be the factor that prevents foreclosure if the property owner has gotten into financial difficulties.

The added security comes from the lender "owning" and directly receiving payments from the lease in addition to the personal guarantee from the borrower.

The other reason to use Assignment of Rents by Lessor is to "sell" a set number of rental income payments.

Why would you consider selling your rental income? To obtain an immediate lump sum of cash. Perhaps you have come across another opportunity and need more money in order to take advantage of it. For instance, you might need a down payment to purchase another rental property.

Why would you consider purchasing someone else's rental payments? Because you have a large sum of cash on hand and want it to earn money. You might negotiate a price that will bring you a higher per cent return on your investment than you are getting in other places. Maybe you don't trust the stock market but love real estate. Purchasing lease payments is a good way to earn real estate income without the headache of being a landlord.

Verbal agreements indicate a high level of trust between the parties, and you may be tempted to use one when dealing with a friend or relative. Reconsider. They are not only an unprofessional way to conduct business, they are a highly effective way to end a friendship or business relationship. The rights and obligations of each party may become fuzzy over time, and misunderstandings due to faulty memory can escalate into bitterness or lawsuits. A lender wouldn't consider conducting business without written agreements, and neither should you.

Instead, use the Assignment of Rents by Lessor form. It's fast, easy, free, and will clarify the agreement between you.

This form clarifies the financial details as well as the duties of the property owner to continue his or her responsibility to the tenants with regard to maintenance, etc. It also sets forth the property owner's obligation of repayment to the lender or buyer should the tenant default on lease payments.

A reliable Free form may be accessed on line from Free and Low Cost Real Estate Forms