Failure to separately discharge an assignment of leases and/or rents, a financing statement or a rider to a mortgage does not impair marketability if, from the record, it can be determined or inferred with reasonable certainty that the assignment, financing statement or rider was given as additional security for an obligation secured by a mortgage which has been discharged of record.
Comment 1. Notwithstanding the foregoing standard, it is good practice to insert in an assignment of leases and/or rents a provision that the discharge of the mortgage securing the obligation for which the assignment is also security shall operate as a discharge of that assignment.
Comment 2. 9A VSA §9-515 provides that, except as otherwise provided in subsections (b), (e), (f), and (g), a filed financing statement is effective for a period of five years after the date of filing. Thus, the provisions of this Standard relating to financing statements become inapplicable if the financing statement at issue has been terminated as a matter of law.. The exception described in (g) states: “A record of a mortgage that is effective as a financing statement filed as a fixture filing under section 9 – 502(c) remains effective as a financing statement filed as a fixture filing until the mortgage is discharged or satisfied of record or its effectiveness otherwise terminates as to the real property.”
Comment 3. On occasion, a mortgage may have been assigned to a subsequent holder, but a collateral assignment of leases and/or rents regarding the loan was not similarly assigned. Despite the different ownership of the mortgage and the assignment, this standard still applies; a discharge of only the mortgage will discharge the assignment.
September 26, 2008: This standard was added.