The Texas Legislature had an unusually busy session in 2011, passing a number of new laws affecting commercial real estate. Among the new laws is the Texas Assignment of Rents Act (TARA).
Commercial loan documents generally include an assignment of leases and rents, which give the lender interests in proceeds the borrower/landlord receives from leases covering the lender’s real estate collateral. Rather than being structured as a security agreement, the documents customarily have contained a present assignment of leases and rents by the borrower to the lender, with a license from the lender back to the borrower to collect rents unless the borrower defaults on the loan.
