Warner Norcross + Judd LLP Partner Rob Davies wrote an article for the Grand Rapids Business Journal titled “New legislation clarifies, strengthens assignment of rents.”The article discusses the new Michigan Uniform Assignment of Rents Act and its improvements to previous laws regarding commercial property defaults or bankruptcies.
Davies explains that when a commercial property faced foreclosure or bankruptcy under previous laws, tenants had difficulty understanding their rent obligations and to which party to pay. The old laws made it possible for landlords to continue to collect rent without passing the payments along to the lender.
With the new act passing in June and becoming law in September, it clarifies the responsibilities of all interested parties and closes previous loopholes in the assignments of rents. The act details the rights and obligations of tenants, landlords and lenders and brings consistency and enforcement to how payments are made and to whom. It also aligns Michigan with other national best practices.
In the article, Davies provides an overview of the act and highlights specific aspects of the legislation that have been enhanced.
To read the GRBJ article, click here.
Davies advises clients on loan origination and real estate legal matters. He serves as counsel for borrowers and lenders in commercial finance transactions and represents banks and debtors in asset-based lending and mortgage loan financings. Learn more about his practice here.