Assignment of rents is a type of security interest. This security interest benefits lenders.
Lenders include banks and private financiers. Assignment of rents differs from mortgages.
Mortgages secure physical properties. Physical properties encompass residential houses and commercial buildings.
Conversely, assignment of rents secures income streams. Income streams arise from leasing properties.
Leasing properties cover condos and office spaces in Bangkok.
Three features popular in assignment of rents include income redirection, lender protection, and default conditions. Income redirection allows lenders to collect rents directly.
Lenders collect rents when borrowers default. Lender protection ensures loan repayment.
Loan repayment occurs through rental income. Default conditions trigger the assignment clause.
The assignment clause activates upon borrower’s failure to meet loan obligations.
Common features of assignment of rents involve contract clauses, enforceability by law, and assignment scope. Contract clauses specify terms.
Terms define rental income handling and rights transfer. Enforceability by law allows legal backing.
Legal backing supports the lender’s right to collect rents. Assignment scope determines the extent of rent collection rights.
Rent collection rights extend to all rents derived from the specified property.
Unusual features in assignment of rents encompass acceleration clauses, substitution of collateral, and future rents assignment. Acceleration clauses enable loan demand in full.
Loan demand occurs before the loan’s scheduled due date. Substitution of collateral allows changing the secured asset.
Changing the secured asset happens without altering the loan agreement. Future rents assignment involves rights to collect rents not yet generated.
Rents not yet generated are from leases not yet signed.
Unique features specific to assignment of rents include Bangkok’s legal framework, foreign ownership restrictions, and specific property types. Bangkok’s legal framework regulates foreign investors’ rights.
Foreign investors’ rights determine rent collection possibilities. Foreign ownership restrictions limit property types foreigners can own.
Property types include leasehold condos. Specific property types eligible for assignment vary.
Variability depends on Thai real estate laws.
Assignment of rents offers more direct income security than traditional mortgages. Traditional mortgages rely on property value.
Property value influences loan recovery in defaults. Direct income security from assignment of rents benefits lenders through immediate cash flow.
Immediate cash flow stems from rental income. Thus, assignment of rents provides a financial cushion.
Financial cushion exists besides the underlying property value.
For further detailed definitions and explanations in real estate, consider visiting our glossary about Bangkok real estate.