Escrow & Title
A South Dakota lender takes an assignment of rents clause in their commercial mortgage. This clause provides that if the borrower defaults:
AThe lender can collect the property's rental income directly✓ Correct
BThe tenants must vacate immediately
CThe lender must buy the property
DThe rents are deposited with the SDREC
Explanation
An assignment of rents clause in a commercial mortgage allows the lender to step in and collect rental income directly from tenants upon the borrower's default, helping the lender protect their security interest.
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