Assigning Real Estate Contracts

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An assignment doesn't always relieve the assignor of liability.

Some contracts may include a guarantee that, regardless of an assignment, the original parties (or one of them) guarantees performance (that is, that the assignee will fulfill the terms of the contract).

The individual buying the contract from the wholesaler will pay the wholesaler a profit for their rights to buy the home, and proceed to pay the seller their asking price.

In its simplest form, assignment of contract allows investors to match sellers with buyers.

Here's an example of a basic assignment of a contract: Tom contracts with a dairy to deliver a bottle of half-and-half to Tom's house every day.

The dairy assigns Tom's contract to another dairy, and--provided Tom is notified of the change and continues to get his daily half-and-half--his contract is now with the new dairy.In order to do that, the other party to the contract must be properly notified.Read on to learn how assignments work, including how to keep an assignment option out of your contract.It is worth noting that the assignment of contract method will never have investors take title to the property, nor will the assignment of contract show up in the title chain.In fact, wholesalers won’t even have to fund the deal.How an assignment of contract plays out depends on many factors, especially the language of the contract.Some contracts may contain a clause prohibiting assignment; other contracts may require the other party to consent to the assignment.An assignment of contract in real estate is initiated when the owner of a property agrees to sell their home to an investor, and actually signs a contract binding themselves to the impending deal.As a result, the investor holds the rights to buy the property, which they may then sell to another buyer.I want to make it abundantly clear: the verbiage of the contract between the seller and the wholesaler is of the utmost importance.All purchase and sale agreements, by default, can be sold to another party unless specifically stated otherwise.

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