Burr Alert: Rent Assignments in Bankruptcy: An Eleventh Circuit Analysis

August 28, 2012

The Bankruptcy Code1 is designed to protect a debtor from creditor actions while the debtor reorganizes its financial affairs or makes a fresh start. To assist the debtor in its efforts to reorganize, the Code also generally prohibits the creation of any new liens,2 and allows the debtor to acquire new property without the imposition of existing liens.3 A creditor cannot generally attach a pre-petition lien to property acquired after the petition date, which property should be available to the debtor to fund the reorganization. However, Congress carved out an exception to this rule for proceeds, products, offspring, profits, and rents.4 Section 552(b)(2) of the Bankruptcy Code allows a creditor with a perfected security agreement in pre-petition property to also have a security interest in any “amounts paid as rents of such property” after the filing of the bankruptcy petition. If the debtor executed an assignment of rents in conjunction with a mortgage on the property, the lender may have a lien interest or other entitlement in the rents generated from the property during the bankruptcy case, in addition to its mortgage interest in the property.

To read more about this topic, please see full alert below

Download PDF



Legal Disclaimer:
No representation is made that the quality of services to be performed is greater than the quality of legal services performed by other lawyers.
send article

TESTIMONIALS

  • “I have an excellent working relationship with a number of attorneys at the firm, all of whom I trust to handle our problems. Even at a generously negotiated rate, we pay the attorneys at Burr & Forman a slightly higher rate than we pay other attorneys for similar services. We are willing to pay that premium because of the firm’s competence in so many areas, whereas other smaller firms tend to specialize in areas and have weaknesses in others.”

    -Chambers 2012

  • “Melinda Sellers has become the valued resource for us when we need guidance regarding a broad range of matters, whether related to HOA legal issues or general corporate matters.  She quickly understands the nuances and potential end results of actions in complicated situations.  Her timely responses and incisive comments and well-reasoned opinions have guided us through many complex issues.  I always want Melinda backing me up. Additionally, she is an absolute pleasure to work with and I look forward to having a long professional and personal relationship with her.”

    -Elbert W. G. Boothby, CPM®, CCIM®, CMCA®, AMS®, PCAM®, President and CEO, Boothby Realty, Inc.

  • “Keith has provided excellent real estate legal support for myself and my colleagues in good times and bad. I have always found Keith's work timely and reasonably priced and would recommend him without a second thought.”

    -Michael Green, CNL Bank

  • “His professionalism, responsiveness, efficiency and depth of knowledge have impressed me."

    -Chambers 2012

  • Owner/President told Ed, "I want to retain you in this case because you are a finisher."

    -Hosea O. Weaver & Sons, Inc.