ASSIGNMENT OF LEASES AND RENT

Failure to release an assignment of rents or a financing statement does not impair marketability if, from the record, it can be determined or inferred with reasonable certainty that the assignment or financing statement was given as additional security for an obligation secured by a mortgage which has been released of record.

Comment 1. Notwithstanding the foregoing standard, it is good practice to insert in an assignment of leases and rentals a provision that the release of the mortgage securing the obligation for which the assignment is also a security shall operate as a release of that assignment.

Comment 2. Sec. 42a-9-403(2) provides that, except as provided in §42a-9-403(6), a financing statement is ineffective after five years in the absence of the filing of a continuation statement. Thus, the provisions of this Standard relating to financing statements become superfluous if the financing statement at issue has been rendered ineffective by the statute. The exception provided in §49a-9-403(6) pertains to a recorded mortgage which meets the requirements of a fixture filing.

Comment 3. On occasion, a mortgage may have been assigned to a subsequent holder, but a collateral assignment of rents regarding the loan was not similarly assigned. Despite the different ownership of the mortgage and the rent assignment, this standard still applies, so that the release of only the mortgage will discharge the rent assignment, provided the searcher can establish, as a matter of record, that the underlying obligation has been satisfied. Often, this may appear as a statement in the release of mortgage to the effect that the debt has been fully paid.