What’s an assignment? A transaction where a buyer “assigns” or transfers their rights and obligations of the Agreement of Purchase and Sale previously agreed upon, to another buyer before the original transaction closes/ completes.

Why would someone want to assign their contract? You’re purchasing the property with someone who is not available to sign the purchase agreement. You may want to reserve the right to assign the contract in whole or in part to them, you may want to have the property registered in a corporation for tax purposes or for profit.

We usually see buyers wanting to assign their contracts for a new development or presale property. That said, we also see them in resale transactions. 

In either case, the Vendor has to agree to this. That wasn't always the case. A few years ago any contract was assignable unless stated in the purchase agreement that is was not allowed. Best practice when dealing with a resale property as a buyer is to have the conversation with the seller when you're presenting the offer. 

 

Typically with resale transactions a buyer knows if they need to add someone to the contract prior to making their offer. There is necessary language and forms that must be used. Regarding new development contracts an assignment term is included in the contract which states the assignment fee (no fee for resale) and how you can or cannot market the property. 

NOTE: An assignment to another purchaser does not alleviate the original purchaser from the contract. If the assignee (new buyer) fails to complete the deal the assignor (original purchaser) will have to. 

Often times there are good opportunities with assignments. Would it be helpful to learn more about them? Reach out: https://www.glennandbrittany.com/social-connect/

Posted by Glenn and Brittany Real Estate on

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