In a trust deed, what is the function of the assignment of rents clause?

• A. Enables the lender to collect rents directly
• B. Allows the borrower to collect rents even if in default
• C. Changes who holds title to the property
• D. Prohibits borrower from collecting rents while neglecting to pay taxes and maintain property

Answer: (D)

Assignment of rents is about protecting the lender by ensuring the property's income can be tapped to cover the loan. It gives the lender the right to collect the rents directly from tenants, typically if the borrower defaults or fails to maintain the property, so there’s a steady cash source to pay the mortgage. It does not transfer ownership, nor does it routinely bar the borrower from collecting rents in all situations. It also isn’t a rule about withholding rents solely for tax or maintenance failures, but about enabling the lender to take control of the rental income to protect loan payments.