Eliza Theiss 
When an individual or entity takes out a mortgage on a property, that property acts as collateral. This means that if the person or entity that took the mortgage is unable to pay the loan back, and said loan goes into default, the lender can then take over possession of the property as payment for the outstanding balance.
An Assignment of Leases and Rents applies to a mortgage on a property that has rental income. This document states that if the mortgage goes into default, the lender has the right to the rental income from the property.
This is not a right guaranteed within the mortgage document
Many would assume that the mortgage document itself, which gives the lender the right to foreclose on the property, would also give the lender the right to any income on the property in the event of default. This is not the case. A separate Assignment of Leases and Rents must be filed along with the mortgage or added to the standard language within the Mortgage itself, to provide direct right to rental income to the mortgagee if the property goes into default.
A clarifying law was passed in 2005
Until 2005, it was possible for a tenant to be asked to pay their rent directly to the lender even if they had already paid their rent to the owner of the property. In 2005, the Uniform Assignment of Rents Act was passed to clarify how a lender could get access to the rental income they are owed and what the tenants’ rights of notice are.
The UARA specified that the lender can request direct payment of rental income from the tenant but lays out specifics on how said lender must provide notice. If the tenant pays the owner of the property after they have been properly notified that they should be paying the lender, then that tenant could end up having to make a double payment.
If there are several lenders giving a tenant notice regarding who the rent should be paid to, the tenant must pay rent to the latest notice they were provided. Tenants are never obligated to sort out disputes – they must simply pay the agreed upon rent to the entity or person who most recently provided legal notice.
