Still Crazy after All These Years: The Absolute Assignment of Rents in Mortgage Loan Transactions

This paper can be found in 59 Fla. L. Rev. (forthcoming July 2007).


This Article explores the problems arising from the use of the absolute assignment of rents in mortgage loan transactions, which have continued for over a century, as well as possible solutions. Rents are a significant part of the security for loans secured by income-producing properties such as office buildings, shopping centers, and apartments. Under present law in many states, the absolute assignment of rents is the only means by which lenders can create an effective security interest in rents of mortgaged property. An absolute assignment of rents purports to transfer title to rents to the mortgage lender although in substance it creates a security interest in rents. The Article explores the historical development of the absolute assignment of rents and discusses the confusion, unnecessary litigation, and even injustice that it causes under state law and in bankruptcy. The National Conference of Commissioners on Uniform State Laws has recently approved the new Uniform Assignment of Rents Act, which removes the necessity for absolute assignments of rents by creating a workable and comprehensive scheme for the creation of security interests in rents. The Article concludes by discussing the Act and recommending its adoption.


Property Law and Real Estate

Date of this Version

October 2006