Leases and Profits Clause Samples
The "Leases and Profits" clause defines how income and benefits derived from leasing or using a property are handled, typically in the context of a mortgage or trust deed. It usually grants the lender the right to collect rents and profits from the property if the borrower defaults on their obligations. For example, if a property owner fails to make mortgage payments, the lender may step in to collect rent from tenants occupying the property. This clause serves to protect the lender’s financial interests by providing an additional source of repayment and helps ensure that the property continues to generate value even during periods of borrower default.
Leases and Profits. (a) In connection with the Loan, Grantor has absolutely and unconditionally assigned to Beneficiary all of Grantor’s right, title and interest in all current and future Leases and Profits, it being intended by Grantor that such assignment constitutes a present, absolute assignment and not an assignment for additional security only. Such assignment to Beneficiary shall not be construed to bind Beneficiary to the performance of any of the covenants, conditions or provisions contained in any such Lease or otherwise to impose any obligation upon Beneficiary. Grantor shall execute and deliver to Beneficiary such additional instruments, in form and substance reasonably satisfactory to Beneficiary, as may hereafter be requested by Beneficiary to further evidence and confirm such assignment. Nevertheless, subject to the terms of this Section, Beneficiary has granted to Grantor a revocable license to operate and manage the Property and to collect the Profits. Grantor shall hold the Profits, or a portion thereof sufficient to discharge all current sums due on the Debt, in trust for the benefit of Beneficiary and subject to the terms hereof. Upon the occurrence of an Event of Default, the license granted to Grantor shall automatically be revoked, and Beneficiary shall immediately be entitled to possession of all Profits, whether or not Beneficiary enters upon or takes control of the Property. Beneficiary is hereby granted and assigned by Grantor the right, at its option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court-appointed receiver to collect the Profits. Any Profits collected after revocation of the license may be applied toward payment of the Debt in such priority and proportions as Beneficiary in its discretion shall deem appropriate.
(b) Grantor shall furnish Beneficiary with executed copies of all Leases, if any. All renewals of Leases and all proposed Leases shall provide for rental rates comparable to existing local market rates and shall be arms-length transactions. All Leases shall provide that they are subordinate to this Deed of Trust and that the lessee agrees to attorn to Beneficiary. Grantor shall: (A) observe and perform all the obligations imposed upon the lessor under the Leases and shall not do or permit to be done anything to materially impair the value of the Leases as security for the Debt; (B) promptly send to Beneficiary copies of all notices of default which Grantor shall send or r...