When people buy a home, or even after they owned their home for some time, they sometimes see an assignment of rents registered on the title to their property. While this raises concerns for many people, a registers assignment of rents remains a normal part of many real estate transactions. Keep reading to learn, the details of these registrations. In the event that you have further questions, please reach out to us. With offices in both Calgary and Edmonton, Kahane Law Office offers full support for all your real estate law needs.
What Is An Assignment Of Rents
An assignment of rents is a document registerable at the Alberta Land Titles Office. Its purpose is to allow a bank or mortgage lender to collect rents in the event a landlord / property owner fails to make their mortgage payments. Essentially, the lender serves notice on the tenants. The notice tells them that the borrower failed to make their mortgage payments. The tenant must then pay their regular rent payment to the lender directly. A tenant only has the requirement to pay, if the assignment is registered on title and they receive notice. Failure to make the payments to the lender then cause legal and financial consequences for the tenant.
When Lenders Use Assignment Of Rents Used
Several situations arise for when lenders require assignment of rents. For example, in almost every situation where a lender lends money for a mortgage on a rental property, the lender requires one. Next, private lenders lending money on a principal residence frequently require one, in the event that the owner decides to rent out the property. A private lender is an individual or smaller company that lends funds privately. These often make up loans to individuals not able to qualify with a regular mortgage lender. Lastly, many lenders lending on commercial transactions require an assignment of rents. If you want to know if your lender requires one, then simply ask. Your banker or mortgage broker has the ability to find out if your situation requires one.
The Cost Of An Assignment Of Rents
The costs associated with an assignment of rents include two components. Firstly, the lawyer drafting the assignment of rents for the lender charges a fee for this service. With almost all lenders, the costs of the lender’s lawyer fees are paid by the borrower. Often the cost for the preparation of this document is about $200 to $400. Next, the second part of the cost involves the land title fee for the document registration. While land title fees change, the cost is currently under $25. Remember, if your property is made up of more than one title, such as a condominium unit with a separate title parking stall, a registration fee applies to all titles with the mortgage.
Discharging The Registered Document
When a person sells a house, or payout out a mortgage, a discharge of the assignments is required. The process for discharging the assignment of rents is usually simple. In most cases, it “falls off” when the mortgage that it is for is discharged. In the event that land titles leaves it on title, the discharge process remains simple. Often a letter or request to discharge works to remove it. Again, this simple removal process only exists if the associated mortgage no longer appears on title. If the mortgage remains on title, then the discharge requires the consent of the lender to ensure they remain protected.
Risks To Buyers
The risk to a buyer of a property with an assignment of rents on title is nominal. In essence, the registration should be removed then the seller’s lawyer discharge their mortgage. Your lawyer ask the lawyer for an undertaking (a lawyer promise binding on the lawyer) to discharge it. If the lawyers forget about it and land title accidentally leaves it on, then the buyer needs to see to its removal. As above, the process for removing it is easy and very low cost in most situations. This is not a registration on title that raises any red flags for a buyer.
How Alberta Lawyers Help With Assignment Of Rents
Understanding real estate law is an important aspect of home ownership. The real estate lawyers at Kahane Law Office help with assignment of rents in many ways. For example, we assist clients with:
- Drafting assignment of rents;
- Reviewing registrations (including these ones) on title with clients;
- Helping lenders (mainstream and private) with mortgages requiring these registrations;
- Discharging the registration from the land title to a property; and lastly
- Serving notice and collecting on the assignment when a borrower fails to make payment.
Help With Assignment Of Rents
Our team of real estate lawyers and real estate litigation lawyers help clients with all aspects of assignment of rents. If you are a borrower or lender, call and we provide you with the assistance you need. Kahane Law Office prides itself in it exceptional level of client service and explains all aspects to you so you understand your specific situation. If you are in the Calgary and surrounding area, please call 403-225-8810. Alternatively, if you live in the Edmonton or surrounding area, please reach us at 780-571-8463. Lastly, while we enjoy phone calls with clients, email often makes the initial contact easier. It allows us to provide you with more information quicker. Please use this email to connect today.