What Does Assignment of Contract Mean in Real Estate

When it comes to real estate transactions, there are many terms that can be confusing for buyers and sellers. One of those terms is „assignment of contract.” In this article, we`ll explore what assignment of contract means in real estate and how it can affect the buying and selling process.

What is Assignment of Contract?

Assignment of contract refers to the process of transferring the rights and responsibilities of a real estate contract from one party to another. This means that the original buyer (assignor) of the property contracts with a third party (assignee) to take over the contract and complete the transaction.

There are many reasons why a buyer may choose to assign their contract to another party. For example, the original buyer may be unable to secure financing or may have a change in circumstances that prevents them from closing the transaction.

In such cases, the assignor may choose to sell their rights to the property to someone else who has the ability and willingness to complete the transaction. In exchange for taking on the contract, the assignee will typically pay a fee to the assignor.

How Does Assignment of Contract Affect Real Estate Transactions?

Assignment of contract can have a significant impact on real estate transactions. For example, it can help buyers who are unable to secure financing or need to back out of a deal due to unforeseen circumstances.

It can also benefit sellers by allowing them to close a deal quickly and avoid delays caused by a buyer’s inability to complete the transaction.

However, there are also some downsides to assignment of contract. For example, it can make the transaction more complex and time-consuming, and there may be legal issues that arise if the assignment is not properly executed.

In addition, the assignee may not be as invested in the property as the original buyer, which could lead to issues with inspections and appraisals.

Conclusion

Overall, assignment of contract can be a useful tool for buyers and sellers in real estate transactions. It provides a way for buyers to back out of a deal when they are unable to complete the purchase, and sellers to close a deal quickly.

However, it`s important for both parties to fully understand the implications of assignment of contract and work with a qualified real estate attorney to ensure that the transaction is executed properly. By doing so, buyers and sellers can avoid costly legal issues and ensure that the transaction is completed successfully.