Michigan law permits borrowers to assign rents from their commercial and industrial properties (other apartments with less than six units and family residences) to their lenders as security for their loan. The lender, however, may only collect the rents after the occurrence of the following events:
In re Mount Pleasant Ltd. P'ship, 144 B.R. 727, 733 (Bankr. W.D. Mich. 1992). Once these events have occurred the lender may collect the rents from the borrower’s tenants. This right to collect rents even survives a bankruptcy petition by the borrow. Id. at 732, 737-38; 11 U.S.C. § 552(b).
For assistance with assignment of rents, please contact us.