Assignment of Contract? Now what?

 

Assignment of contract: What happens when the Buyer "assigns" the purchase contract to another Buyer amid a purchase and sale real estate transaction? 

by: George Castro, P.A.

Real Estate can be a game of chess when Buyers present contracts with confusing terms. Sellers can accept a contract from one Buyer and end up to the closing table with a completely new Buyer. This is legal as long as all parties agree to the assignability of the contract. But what does "assign" mean to the Seller and how can it affect the purchase and sale transaction?

Paragraph 7 of the Far/Bar contract depicts the assignment clause. However, always check the contract you have executed. Buyer and Seller must agree that the Buyer may transfer the contract, along with the terms to a new party (Buyer), and the initial Buyer may be released from further obligation. If the initial Buyer is released, they may walk away with no repercussions. Why would the Buyer want to release the contract to another Buyer?

There can be a monetary reward for risky Buyers (investors) that seek to "assign" purchase contracts to another party prior to closing. The Buyer may want to change the name to a corporation, or the Buyer may not want to exercise the option to assign at all. As for the Seller, an assignment can assist them in the event the Buyer cannot qualify, and other than placing the property back on the market, another Buyer can fumble the transaction and take it to the closing table. It is crucial to understand the legality of assignment.  

If the option is presented, be sure to have a professional Realtor that will have the knowledge on how to navigate through the liability of releasing the Buyer. 

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This article is not to be construed as legal advice. Always be sure to consult with a real estate Attorney.