Assignment of leases and rents to the bank? What's this??

[Jon Schwartz]

Hi all,

I'm considering a fourplex in a secondary market, and while researching the property on the county website, I found an assignment of leases and rents to the bank. I'll go into more detail below, but I'm trying to figure out if this means the owner is earning no profits while his mortgage is being paid off. And if so, is he a distressed seller? Should I make a low ball offer?

Okay, here are the details of what I found with filing dates:

5/12/2014 - WARRANTY DEED: It appears that the duplex was purchased for $147,700. I don't see any information about a mortgage.

12/17/2015 - COMMERCIAL REAL ESTATE MORTGAGE: This is a commercial (not residential!) loan for $50,000 with a maturity date in one year (12/14/2016).

12/16/16 - MODIFICATION AGREEMENT - MORTGAGE: This document extends the maturity date to 6/2/2017.

12/16/16 - ASSIGNMENT OF LEASES AND RENTS: This is the really interesting document! It assigns "the entire lessor's interest in and to all current and future leases and other agreements affecting the use, enjoyment, or occupancy of all or any part" of the fourplex to the bank. Does this mean the owner is sending a monthly check to the bank with all his proceeds from the fourplex?!!

6/6/2017: MODIFICATION OF AGREEMENT - MORTGAGE: This document extends the maturity date to 6/5/2020.

So, legal eagles of Bigger Pockets, what does this mean? Has the owner forfeited his profits because he still owes the bank money? Shall I use this information to make a low-ball offer? Please let me know what you think is going on and how I should proceed.

Thanks so much!!!