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Taking Assignments of Equipment Leases: An Analysis of an Acceptable Documentation Package

By Barry S. Marks and Ken Weinberg

Like many financial products, equipment leases can be bought and sold. The lease assignment market has become increasingly active and complex in recent years, despite the economic downturn of the early 21st century. This article highlights the type of documentation that should generally be required when a broker or other originator of leases (the “Originator”) assigns leases to a funding bank (the “Funder”).

Of course, equipment leases are assigned in a variety of ways including outright assignments and collateral assignments (“discounting” transactions). The underlying leases being assigned are sometimes true leases and other times disguised loans (“leases intended as security”). Although these factors can sometimes affect the documentation that is required, this article outlines what is generally required in both outright assignments and discounting transactions of both true leases and leases intended as security. The article does not address “pure broker” situations pursuant to which the Funder would execute the lease directly, as lessor, as opposed to taking some sort of an assignment from the Originator.

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