• Assignment Clause

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Assignment clause defined.

Assignment clauses are legally binding provisions in contracts that give a party the chance to engage in a transfer of ownership or assign their contractual obligations and rights to a different contracting party.

In other words, an assignment clause can reassign contracts to another party. They can commonly be seen in contracts related to business purchases.

Here’s an article about assignment clauses.

Assignment Clause Explained

Assignment contracts are helpful when you need to maintain an ongoing obligation regardless of ownership. Some agreements have limitations or prohibitions on assignments, while other parties can freely enter into them.

Here’s another article about assignment clauses.

Purpose of Assignment Clause

The purpose of assignment clauses is to establish the terms around transferring contractual obligations. The Uniform Commercial Code (UCC) permits the enforceability of assignment clauses.

Assignment Clause Examples

Examples of assignment clauses include:

  • Example 1 . A business closing or a change of control occurs
  • Example 2 . New services providers taking over existing customer contracts
  • Example 3 . Unique real estate obligations transferring to a new property owner as a condition of sale
  • Example 4 . Many mergers and acquisitions transactions, such as insurance companies taking over customer policies during a merger

Here’s an article about the different types of assignment clauses.

Assignment Clause Samples

Sample 1 – sales contract.

Assignment; Survival .  Neither party shall assign all or any portion of the Contract without the other party’s prior written consent, which consent shall not be unreasonably withheld; provided, however, that either party may, without such consent, assign this Agreement, in whole or in part, in connection with the transfer or sale of all or substantially all of the assets or business of such Party relating to the product(s) to which this Agreement relates. The Contract shall bind and inure to the benefit of the successors and permitted assigns of the respective parties. Any assignment or transfer not in accordance with this Contract shall be void. In order that the parties may fully exercise their rights and perform their obligations arising under the Contract, any provisions of the Contract that are required to ensure such exercise or performance (including any obligation accrued as of the termination date) shall survive the termination of the Contract.

Reference :

Security Exchange Commission - Edgar Database,  EX-10.29 3 dex1029.htm SALES CONTRACT , Viewed May 10, 2021, <  https://www.sec.gov/Archives/edgar/data/1492426/000119312510226984/dex1029.htm >.

Sample 2 – Purchase and Sale Agreement

Assignment . Purchaser shall not assign this Agreement or any interest therein to any Person, without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion. Notwithstanding the foregoing, upon prior written notice to Seller, Purchaser may designate any Affiliate as its nominee to receive title to the Property, or assign all of its right, title and interest in this Agreement to any Affiliate of Purchaser by providing written notice to Seller no later than five (5) Business Days prior to the Closing; provided, however, that (a) such Affiliate remains an Affiliate of Purchaser, (b) Purchaser shall not be released from any of its liabilities and obligations under this Agreement by reason of such designation or assignment, (c) such designation or assignment shall not be effective until Purchaser has provided Seller with a fully executed copy of such designation or assignment and assumption instrument, which shall (i) provide that Purchaser and such designee or assignee shall be jointly and severally liable for all liabilities and obligations of Purchaser under this Agreement, (ii) provide that Purchaser and its designee or assignee agree to pay any additional transfer tax as a result of such designation or assignment, (iii) include a representation and warranty in favor of Seller that all representations and warranties made by Purchaser in this Agreement are true and correct with respect to such designee or assignee as of the date of such designation or assignment, and will be true and correct as of the Closing, and (iv) otherwise be in form and substance satisfactory to Seller and (d) such Assignee is approved by Manager as an assignee of the Management Agreement under Article X of the Management Agreement. For purposes of this Section 16.4, “Affiliate” shall include any direct or indirect member or shareholder of the Person in question, in addition to any Person that would be deemed an Affiliate pursuant to the definition of “Affiliate” under Section 1.1 hereof and not by way of limitation of such definition.

Security Exchange Commission - Edgar Database,  EX-10.8 3 dex108.htm PURCHASE AND SALE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1490985/000119312510160407/dex108.htm >.

Sample 3 – Share Purchase Agreement

Assignment . Neither this Agreement nor any right or obligation hereunder may be assigned by any Party without the prior written consent of the other Parties, and any attempted assignment without the required consents shall be void.

Security Exchange Commission - Edgar Database,  EX-4.12 3 dex412.htm SHARE PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1329394/000119312507148404/dex412.htm >.

Sample 4 – Asset Purchase Agreement

Assignment . This Agreement and any of the rights, interests, or obligations incurred hereunder, in part or as a whole, at any time after the Closing, are freely assignable by Buyer. This Agreement and any of the rights, interests, or obligations incurred hereunder, in part or as a whole, are assignable by Seller only upon the prior written consent of Buyer, which consent shall not be unreasonably withheld. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

Security Exchange Commission - Edgar Database,  EX-2.1 2 dex21.htm ASSET PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1428669/000119312510013625/dex21.htm >.

Sample 5 – Asset Purchase Agreement

Assignment; Binding Effect; Severability

This Agreement may not be assigned by any party hereto without the other party’s written consent; provided, that Buyer may transfer or assign in whole or in part to one or more Buyer Designee its right to purchase all or a portion of the Purchased Assets, but no such transfer or assignment will relieve Buyer of its obligations hereunder. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors, legal representatives and permitted assigns of each party hereto. The provisions of this Agreement are severable, and in the event that any one or more provisions are deemed illegal or unenforceable the remaining provisions shall remain in full force and effect unless the deletion of such provision shall cause this Agreement to become materially adverse to either party, in which event the parties shall use reasonable commercial efforts to arrive at an accommodation that best preserves for the parties the benefits and obligations of the offending provision.

Security Exchange Commission - Edgar Database,  EX-2.4 2 dex24.htm ASSET PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1002047/000119312511171858/dex24.htm >.

Common Contracts with Assignment Clauses

Common contracts with assignment clauses include:

  • Real estate contracts
  • Sales contract
  • Asset purchase agreement
  • Purchase and sale agreement
  • Bill of sale
  • Assignment and transaction financing agreement

Assignment Clause FAQs

Assignment clauses are powerful when used correctly. Check out the assignment clause FAQs below to learn more:

What is an assignment clause in real estate?

Assignment clauses in real estate transfer legal obligations from one owner to another party. They also allow house flippers to engage in a contract negotiation with a seller and then assign the real estate to the buyer while collecting a fee for their services. Real estate lawyers assist in the drafting of assignment clauses in real estate transactions.

What does no assignment clause mean?

No assignment clauses prohibit the transfer or assignment of contract obligations from one part to another.

What’s the purpose of the transfer and assignment clause in the purchase agreement?

The purpose of the transfer and assignment clause in the purchase agreement is to protect all involved parties’ rights and ensure that assignments are not to be unreasonably withheld. Contract lawyers can help you avoid legal mistakes when drafting your business contracts’ transfer and assignment clauses.

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An assignment clause (AC) is an important part of many contracts, especially for real estate. In this article we discuss:

  • What is an Assignment Clause? (with Example)
  • Anti-Assignment Clauses (with Example)
  • Non-Assignment Clauses
  • Important Considerations
  • How Assets America ® Can Help

Frequently Asked Questions

What is an assignment clause.

An AC is part of a contract governing the sale of a property and other transactions. It deals with questions regarding the assignment of the property in the purchase agreement. The thrust of the assignment clause is that the buyer can rent, lease, repair, sell, or assign the property.

To “assign” simply means to hand off the benefits and obligations of a contract from one party to another. In short, it’s the transfer of contractual rights.

In-Depth Definition

Explicitly, an AC expresses the liabilities surrounding the assignment from the assignor to the assignee. The real estate contract assignment clause can take on two different forms, depending on the contract author:

  • The AC states that the assignor makes no representations or warranties about the property or the agreement. This makes the assignment “AS IS.”
  • The assignee won’t hold the assignor at fault. It protects the assignor from damages, liabilities, costs, claims, or other expenses stemming from the agreement.

The contract’s assignment clause states the “buyer and/or assigns.” In this clause, “assigns” is a noun that means assignees. It refers to anyone you choose to receive your property rights.

The assignment provision establishes the fact that the buyer (who is the assignor) can assign the property to an assignee. Upon assignment, the assignee becomes the new buyer.

The AC conveys to the assignee both the AC’s property rights and the AC’s contract obligations. After an assignment, the assignor is out of the picture.

What is a Lease Assignment?

Assignment Clause Example

This is an example of a real estate contract assignment clause :

“The Buyer reserves the right to assign this contract in whole or in part to any third party without further notice to the Seller; said assignment not to relieve the Buyer from his or her obligation to complete the terms and conditions of this contract should be assigning default.”

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Assignment provision.

An assignment provision is a separate clause that states the assignee’s acceptance of the contract assignment.

Assignment Provision Example

Here is an example of an assignment provision :

“Investor, as Assignee, hereby accepts the above and foregoing Assignment of Contract dated XXXX, XX, 20XX by and between Assignor and ____________________ (seller) and agrees to assume all of the obligations and perform all of the duties of Assignor under the Contract.”

Anti-Assignment Clauses & Non-Assignment Clauses

An anti-assignment clause prevents either party from assigning a contract without the permission of the other party. It typically does so by prohibiting payment for the assignment. A non-assignment clause is another name for an anti-assignment clause.

Anti-Assignment Clause Example

This is an anti-assignment clause example from the AIA Standard Form of Agreement:

” The Party 1 and Party 2, respectively, bind themselves, their partners, successors, assigns, and legal representatives to the other party to this Agreement and to the partners, successors, assigns, and legal representatives of such other party with respect to all covenants of this Agreement. Neither Party 1 nor Party 2 shall assign this Agreement without the written consent of the other.”

Important Considerations for Assignment Contracts

The presence of an AC triggers several important considerations.

Assignment Fee

In essence, the assignor is a broker that brings together a buyer and seller. As such, the assignor collects a fee for this service. Naturally, the assignor doesn’t incur the normal expenses of a buyer.

Rather, the new buyer assumes those expenses. In reality, the assignment fee replaces the fee the realtor or broker would charge in a normal transaction. Frequently, the assignment fee is less than a regular brokerage fee.

For example, compare a 2% assignment fee compared to a 6% brokerage fee. That’s a savings of $200,000 on a $5 million purchase price. Wholesalers are professionals who earn a living through assignments.

Frequently, the assignor will require that the assignee deposit the fee into escrow. Typically, the fee is not refundable, even if the assignee backs out of the deal after signing the assignment provision. In some cases, the assignee will fork over the fee directly to the assignor.

Assignor Intent

Just because the contract contains an AC does not obligate the buyer to assign the contract. The buyer remains the buyer unless it chooses to exercise the AC, at which point it becomes the assignor. It is up to the buyer to decide whether to go through with the purchase or assign the contract.

Nonetheless, the AC signals the seller of your possible intent to assign the purchase contract to someone else. For one thing, the seller might object if you try to assign the property without an AC.

You can have serious problems at closing if you show up with a surprise assignee. In fact, you could jeopardize the entire deal.

Another thing to consider is whether the buyer’s desire for an AC in the contract will frighten the seller. Perhaps the seller is very picky about the type of buyer to whom it will sell.

Or perhaps the seller has heard horror stories, real or fake, about assignments. Whatever the reason, the real estate contract assignment clause might put a possible deal in jeopardy.

Chain of Title

If you assign a property before the closing, you will not be in the chain of title. Obviously, this differs from the case in which you sell the property five minutes after buying it.

In the latter case, your name will appear in the chain of title twice, once as the buyer and again as the seller. In addition, the latter case would involve two sets of closing costs, whereas there would only one be for the assignment case. This includes back-to-back (or double) closings.


Assignment might not be enforceable in all situations, such as when:

  • State law or public policy prohibits it.
  • The contract prohibits it.
  • The assignment significantly changes the expectations of the seller. Those expectations can include decreasing the value of the property or increasing the risk of default.

Also note that REO (real estate owned) properties, HUD properties, and listed properties usually don’t permit assignment contracts. An REO property is real estate owned by a bank after foreclosure. Typically, these require a 90-day period before a property can be resold.

How Assets America Can Help

The AC is a portion of a purchase agreement. When a purchase involves a commercial property requiring a loan of $10 million or greater, Assets America ® can arrange your financing.

We can finance wholesalers who decide to go through with a purchase. Alternatively, we can finance assignees as well. In either case, we offer expedient, professional financing and many supporting services. Contact us today for a confidential consultation.

What rights can you assign despite a contract clause expressly prohibiting assignment?

Normally, a prohibition against assignment does not curb the right to receive payments due. However, circumstances may cause the opposite outcome. Additionally, prohibition doesn’t prevent the right to money that the contract specifies is due.

What is the purpose of an assignment of rents clause in a deed of trust and who benefits?

The assignment of rents clause is a provision in a mortgage or deed of trust. It gives the lender the right to collect rents from mortgaged properties if the borrower defaults. All incomes and rents from a secured property flow to the lender and offset the outstanding debt. Clearly, this benefits the lender.

What is in assignment clause in a health insurance contract?

Commonly, health insurance policies contain assignment of benefits (AOB) clauses. These clauses allow the insurer to pay benefits directly to health care providers instead of the patient. In some cases, the provider has the patient sign an assignment agreement that accomplishes the same outcome. The provider submits the AOB agreement along with the insurance claim.

What does “assignment clause” mean for liability insurance?

The clause would allow the assignment of proceeds from a liability award payable to a third party. However, the insured must consent to the clause or else it isn’t binding. This restriction applies only before a loss. After a first party loss, the insurer’s consent no longer matters.

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How To Navigate The Real Estate Assignment Contract

real estate assignment clause

What is assignment of contract?

Assignment of contract vs double close

How to assign a contract

Assignment of contract pros and cons

Even the most left-brained, technical real estate practitioners may find themselves overwhelmed by the legal forms that have become synonymous with the investing industry. The assignment of contract strategy, in particular, has developed a confusing reputation for those unfamiliar with the concept of wholesaling. At the very least, there’s a good chance the “assignment of contract real estate” exit strategy sounds more like a foreign language to new investors than a viable means to an end.

A real estate assignment contract isn’t as complicated as many make it out to be, nor is it something to shy away from because of a lack of understanding. Instead, new investors need to learn how to assign a real estate contract as this particular exit strategy represents one of the best ways to break into the industry.

In this article, we will break down the elements of a real estate assignment contract, or a real estate wholesale contract, and provide strategies for how it can help investors further their careers. [ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

What Is A Real Estate Assignment Contract?

A real estate assignment contract is a wholesale strategy used by real estate investors to facilitate the sale of a property between an owner and an end buyer. As its name suggests, contract assignment strategies will witness a subject property owner sign a contract with an investor that gives them the rights to buy the home. That’s an important distinction to make, as the contract only gives the investor the right to buy the home; they don’t actually follow through on a purchase. Once under contract, however, the investor retains the sole right to buy the home. That means they may then sell their rights to buy the house to another buyer. Therefore, when a wholesaler executes a contact assignment, they aren’t selling a house but rather their rights to buy a house. The end buyer will pay the wholesale a small assignment fee and buy the house from the original buyer.

The real estate assignment contract strategy is only as strong as the contracts used in the agreement. The language used in the respective contract is of the utmost importance and should clearly define what the investors and sellers expect out of the deal.

There are a couple of caveats to keep in mind when considering using sales contracts for real estate:

Contract prohibitions: Make sure the contract you have with the property seller does not have prohibitions for future assignments. This can create serious issues down the road. Make sure the contract is drafted by a lawyer that specializes in real estate assignment contract law.

Property-specific prohibitions: HUD homes (property obtained by the Department of Housing and Urban Development), real estate owned or REOs (foreclosed-upon property), and listed properties are not open to assignment contracts. REO properties, for example, have a 90-day period before being allowed to be resold.

assignment fee

What Is An Assignment Fee In Real Estate?

An assignment fee in real estate is the money a wholesaler can expect to receive from an end buyer when they sell them their rights to buy the subject property. In other words, the assignment fee serves as the monetary compensation awarded to the wholesaler for connecting the original seller with the end buyer.

Again, any contract used to disclose a wholesale deal should be completely transparent, and including the assignment fee is no exception. The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself.

The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers). As with any negotiations , proper information is vital. Take the time to find out how much the property would realistically cost before and after repairs. Then, add your preferred assignment fee on top of it.

Traditionally, investors will receive a deposit when they sign the Assignment of Real Estate Purchase and Sale Agreement . The rest of the assignment fee will be paid out upon the deal closing.

Assignment Contract Vs Double Close

The real estate assignment contract strategy is just one of the two methods investors may use to wholesale a deal. In addition to assigning contracts, investors may also choose to double close. While both strategies are essentially variations of a wholesale deal, several differences must be noted.

A double closing, otherwise known as a back-to-back closing, will have investors actually purchase the home. However, instead of holding onto it, they will immediately sell the asset without rehabbing it. Double closings aren’t as traditional as fast as contract assignment, but they can be in the right situation. Double closings can also take as long as a few weeks. In the end, double closings aren’t all that different from a traditional buy and sell; they transpire over a meeter of weeks instead of months.

Assignment real estate strategies are usually the first option investors will want to consider, as they are slightly easier and less involved. That said, real estate assignment contract methods aren’t necessarily better; they are just different. The wholesale strategy an investor chooses is entirely dependent on their situation. For example, if a buyer cannot line up funding fast enough, they may need to initiate a double closing because they don’t have the capital to pay the acquisition costs and assignment fee. Meanwhile, select institutional lenders incorporate language against lending money in an assignment of contract scenario. Therefore, any subsequent wholesale will need to be an assignment of contract.

Double closings and contract assignments are simply two means of obtaining the same end. Neither is better than the other; they are meant to be used in different scenarios.

Flipping Real Estate Contracts

Those unfamiliar with the real estate contract assignment concept may know it as something else: flipping real estate contracts; if for nothing else, the two are one-in-the-same. Flipping real estate contracts is simply another way to refer to assigning a contract.

Is An Assignment Of Contract Legal?

Yes, an assignment of contract is legal when executed correctly. Wholesalers must follow local laws regulating the language of contracts, as some jurisdictions have more regulations than others. It is also becoming increasingly common to assign contracts to a legal entity or LLC rather than an individual, to prevent objections from the bank. Note that you will need written consent from all parties listed on the contract, and there cannot be any clauses present that violate the law. If you have any questions about the specific language to include in a contract, it’s always a good idea to consult a qualified real estate attorney.

When Will Assignments Not Be Enforced?

In certain cases, an assignment of contract will not be enforced. Most notably, if the contract violates the law or any local regulations it cannot be enforced. This is why it is always encouraged to understand real estate laws and policy as soon as you enter the industry. Further, working with a qualified attorney when crafting contracts can be beneficial.

It may seem obvious, but assignment contracts will not be enforced if the language is used incorrectly. If the language in a contract contradicts itself, or if the contract is not legally binding it cannot be enforced. Essentially if there is any anti-assignment language, this can void the contract. Finally, if the assignment violates what is included under the contract, for example by devaluing the item, the contract will likely not be enforced.

How To Assign A Real Estate Contract

A wholesaling investment strategy that utilizes assignment contracts has many advantages, one of them being a low barrier-to-entry for investors. However, despite its inherent profitability, there are a lot of investors that underestimate the process. While probably the easiest exit strategy in all of real estate investing, there are a number of steps that must be taken to ensure a timely and profitable contract assignment, not the least of which include:

Find the right property

Acquire a real estate contract template

Submit the contract

Assign the contract

Collect the fee

1. Find The Right Property

You need to prune your leads, whether from newspaper ads, online marketing, or direct mail marketing. Remember, you aren’t just looking for any seller: you need a motivated seller who will sell their property at a price that works with your investing strategy.

The difference between a regular seller and a motivated seller is the latter’s sense of urgency. A motivated seller wants their property sold now. Pick a seller who wants to be rid of their property in the quickest time possible. It could be because they’re moving out of state, or they want to buy another house in a different area ASAP. Or, they don’t want to live in that house anymore for personal reasons. The key is to know their motivation for selling and determine if that intent is enough to sell immediately.

With a better idea of who to buy from, wholesalers will have an easier time exercising one of several marketing strategies:

Direct Mail

Real Estate Meetings

Local Marketing

2. Acquire A Real Estate Contract Template

Real estate assignment contract templates are readily available online. Although it’s tempting to go the DIY route, it’s generally advisable to let a lawyer see it first. This way, you will have the comfort of knowing you are doing it right, and that you have counsel in case of any legal problems along the way.

One of the things proper wholesale real estate contracts add is the phrase “and/or assigns” next to your name. This clause will give you the authority to sell the property or assign the property to another buyer.

You do need to disclose this to the seller and explain the clause if needed. Assure them that they will still get the amount you both agreed upon, but it gives you deal flexibility down the road.

3. Submit The Contract

Depending on your state’s laws, you need to submit your real estate assignment contract to a title company, or a closing attorney, for a title search. These are independent parties that look into the history of a property, seeing that there are no liens attached to the title. They then sign off on the validity of the contract.

4. Assign The Contract

Finding your buyer, similar to finding a seller, requires proper segmentation. When searching for buyers, investors should exercise several avenues, including online marketing, listing websites, or networking groups. In the real estate industry, this process is called building a buyer’s list, and it is a crucial step to finding success in assigning contracts.

Once you have found a buyer (hopefully from your ever-growing buyer’s list), ensure your contract includes language that covers earnest money to be paid upfront. This grants you protection against a possible breach of contract. This also assures you that you will profit, whether the transaction closes or not, as earnest money is non-refundable. How much it is depends on you, as long as it is properly justified.

5. Collect The Fee

Your profit from a deal of this kind comes from both your assignment fee, as well as the difference between the agreed-upon value and how much you sell it to the buyer. If you and the seller decide you will buy the property for $75,000 and sell it for $80,000 to the buyer, you profit $5,000. The deal is closed once the buyer pays the full $80,000.

real estate assignment contract

Assignment of Contract Pros

For many investors, the most attractive benefit of an assignment of contract is the ability to profit without ever purchasing a property. This is often what attracts people to start wholesaling, as it allows many to learn the ropes of real estate with relatively low stakes. An assignment fee can either be determined as a percentage of the purchase price or as a set amount determined by the wholesaler. A standard fee is around $5,000 per contract.

The profit potential is not the only positive associated with an assignment of contract. Investors also benefit from not being added to the title chain, which can greatly reduce the costs and timeline associated with a deal. This benefit can even transfer to the seller and end buyer, as they get to avoid paying a real estate agent fee by opting for an assignment of contract. Compared to a double close (another popular wholesaling strategy), investors can avoid two sets of closing costs. All of these pros can positively impact an investor’s bottom line, making this a highly desirable exit strategy.

Assignment of Contract Cons

Although there are numerous perks to an assignment of contract, there are a few downsides to be aware of before searching for your first wholesale deal. Namely, working with buyers and sellers who may not be familiar with wholesaling can be challenging. Investors need to be prepared to familiarize newcomers with the process and be ready to answer any questions. Occasionally, sellers will purposely not accept an assignment of contract situation. Investors should occasionally expect this, as to not get discouraged.

Another obstacle wholesalers may face when working with an assignment of contract is in cases where the end buyer wants to back out. This can happen if the buyer is not comfortable paying the assignment fee, or if they don’t have owner’s rights until the contract is fully assigned. The best way to protect yourself from situations like this is to form a reliable buyer’s list and be upfront with all of the information. It is always recommended to develop a solid contract as well.

Know that not all properties can be wholesaled, for example HUD houses. In these cases, there are often anti-assigned clauses preventing wholesalers from getting involved. Make sure you know how to identify these properties so you don’t waste your time. Keep in mind that while there are cons to this real estate exit strategy, the right preparation can help investors avoid any big challenges.

Assignment of Contract Template

If you decide to pursue a career wholesaling real estate, then you’ll want the tools that will make your life as easy as possible. The good news is that there are plenty of real estate tools and templates at your disposal so that you don’t have to reinvent the wheel! For instance, here is an assignment of contract template that you can use when you strike your first deal.

As with any part of the real estate investing trade, no single aspect will lead to success. However, understanding how a real estate assignment of contract works is vital for this business. When you comprehend the many layers of how contracts are assigned—and how wholesaling works from beginning to end—you’ll be a more informed, educated, and successful investor.

Click the banner below to take a 90-minute online training class and get started learning how to invest in today’s real estate market!

real estate assignment clause

Wholetailing: A Guide For Real Estate Investors

What is chain of title in real estate investing, what is a real estate fund of funds (fof), reits vs real estate: which is the better investment, multi-family vs. single-family property investments: a comprehensive guide, what is reverse wholesaling: a guide for real estate investors.


Assignment of Contract – Assignable Contract Basics for Real Estate Investors

What is assignment of contract? Learn about this wholesaling strategy and why assignment agreements are the preferred solution for flipping real estate contracts.

real estate assignment clause

Beginners to investing in real estate and wholesaling must navigate a complex landscape littered with confusing terms and strategies. One of the first concepts to understand before wholesaling is assignment of contract, also known as assignment of agreement or “flipping real estate contracts.”  

An assignment contract is the most popular exit strategy for wholesalers, and it isn’t as complicated as it may seem. What does assignment of contract mean? How can it be used to get into wholesaling? Here’s what you need to know.

What Is Assignment of Contract?

How assignment of contract works in real estate wholesaling, what is an assignment fee in real estate, assignment of agreement pros & cons, assignable contract faqs.

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Assignment of real estate purchase and sale agreement, or simply assignment of agreement or contract, is a real estate wholesale strategy that facilitates a sale between the property owner and the end buyer.

This strategy is also known as flipping real estate contracts because that’s essentially how it works:

  • The wholesaler finds a property that’s already discounted or represents a great deal and enters into a contract with the seller,
  • The contract contains an assignment clause that allows the wholesaler to assign the contract to someone else (if they choose to!), then
  • The wholesaler can assign the contract to another party and receive an assignment fee when the transaction closes.

Assignment of contract in real estate is a popular strategy for beginners in real estate investment because it requires very little or even no capital. As long as you can find an interested buyer, you do not need to come up with a large sum of money to buy and then resell the property – you are only selling your right to buy it .

An assignment contract passes along your purchase rights as well as your contract obligations. After the contract assignment, you are no longer involved in the transaction with no right to make claims or responsibilities to get the transaction to closing.

Until you assign contract to someone else, however, you are completely on the hook for all contract responsibilities and rights.

This means that you are in control of the deal until you decide to assign the contract, but if you aren’t able to get someone to take over the contract, you are legally obligated to follow through with the sale .

Assignment of Contract vs Double Closing

Double closing and assignment of agreement are the two main real estate wholesaling exit strategies. Unlike the double closing strategy, an assignment contract does not require the wholesaler to purchase the property.

Assignment of contract is usually the preferred option because it can be completed in hours and does not require you to fund the purchase . Double closings take twice as much work and require a great deal of coordination. They are also illegal in some states.

Ready to see how an assignment contract actually works? Even though it has a low barrier to entry for beginner investors, the challenges of completing an assignment of contract shouldn’t be underestimated. Here are the general steps involved in wholesaling.

Step #1. Find a seller/property

The process begins by finding a property that you think is a good deal or a good investment and entering into a purchase agreement with the seller. Of course, not just any property is suitable for this strategy. You need to find a motivated seller willing to accept an assignment agreement and a price that works with your strategy. Direct mail marketing, online marketing, and checking the county delinquent tax list are just a few possible lead generation strategies you can employ.

Step #2: Enter into an assignable contract

The contract with the seller will be almost the same as a standard purchase agreement except it will contain an assignment clause.

An important element in an assignable purchase contract is “ and/or assigns ” next to your name as the buyer . The term “assigns” is used here as a noun to refer to a potential assignee. This is a basic assignment clause authorizing you to transfer your position and rights in the contract to an assignee if you choose.

The contract must also follow local laws regulating contract language. In some jurisdictions, assignment of contract is not allowed. It’s becoming increasingly common for wholesalers to assign agreements to an LLC instead of an individual. In this case, the LLC would be under contract with the seller. This can potentially bypass lender objections and even anti-assignment clauses for distressed properties. Rather than assigning the contract to someone else, the investor can reassign their interest in the LLC through an “assignment of membership interest.”

Note: even the presence of an assignment clause can make some sellers nervous or unwilling to make a deal . The seller may be picky about whom they want to buy the property, or they may be suspicious or concerned about the concept of assigning a contract to an unknown third party who may or may not be able to complete the sale.

The assignment clause should always be disclosed and explained to the seller. If they are nervous, they can be assured that they will still get the agreed-upon amount.

Step #3. Submit the assignment contract for a title search

Once you are under contract, you must typically submit the contract to a title company to perform the title search. This ensures there are no liens attached to the property.

Step #4. Find an end buyer to assign the contract

Next is the most challenging step: finding a buyer who can fulfill the contract’s original terms including the closing date and purchase price.

Successful wholesalers build buyers lists and employ marketing campaigns, social media, and networking to find a good match for an assignable contract.

Once you locate an end buyer, your contract should include earnest money the buyer must pay upfront. This gives you some protection if the buyer breaches the contract and, potentially, causes you to breach your contract with the seller. With a non-refundable deposit, you can be sure your earnest money to the seller will be covered in a worst-case scenario.

You can see an assignment of contract example here between an assignor and assignee.

Step #5. Receive your assignment fee

The final step is receiving your assignment fee. This fee is your profit from the transaction, and it’s usually paid when the transaction closes.

The assignment fee is how the wholesaler makes money through an assignment contract. This fee is paid by the end buyer when they purchase the right to buy the property as compensation for being connected to the original seller. Assignment contracts should clearly spell out the assignment fee and how it will be paid.

An assignment fee in real estate replaces the broker or Realtor fee in a typical transaction as the assignor or investor is bringing together the seller and end buyer.

The standard real estate assignment fee is $5,000 . However, it varies by transaction and calculating the assignment fee may be higher or lower depending on whether the buyer is buying and holding the property or rehabbing and flipping.

The assignment fee is not always a flat amount. The difference between the agreed-upon price with the seller and the end buyer is the profit you stand to earn as the assignor. If you agreed to purchase the property for $150,000 from the seller and assign the contract to a buyer for $200,000, your assignment fee or profit would be $50,000.

In most cases, an investor receives a deposit when the Assignment of Purchase and Sale Agreement is signed with the rest paid at closing.

Be aware that assignment agreements can have a bad reputation . This is usually the case when the end buyer and seller are unsatisfied, realizing they could have sold higher or bought lower and essentially paid thousands to an investor who never even wanted to buy the property.

Opting for the standard, flat assignment fee is much more readily accepted by sellers and buyers as it’s comparable to a real estate agent’s commission or even much lower and the parties can avoid working with an agent.

Real estate investors enjoy many benefits of an assignment of contract:

  • This strategy requires little or no capital which makes it a popular entry to wholesaling as investors learn the ropes.
  • Investors are not added to the title chain and never own the property which reduces costs and the amount of time the deal takes.
  • An assignment of agreement is easier and faster than double closing which requires two separate closings and two sets of fees and disclosures.
  • Wholesaling can be a great tool to expand an investor’s network for future opportunities.

As with most things, there are important drawbacks to consider. Before jumping into wholesaling and flipping real estate contracts, consider the downsides .

  • It can be difficult to work with sellers and buyers who are not familiar with wholesaling or assignment agreements.
  • Some sellers avoid or decline assignment of contract offers because they are suspicious of the arrangement, think it is too risky, or want to know who they are selling to.
  • There is a limited time to find an end buyer. Without a reliable buyer’s list, it can be very challenging to find a viable end buyer before the closing date.
  • The end buyer may back out at the last minute. This may happen if they do not have owner’s rights until the contract is assigned or they do not want to pay an assignment fee.
  • Not all properties are eligible for wholesaling like HUD and REO properties. There may be anti-assignment clauses or other hurdles. It is possible to get around this by purchasing the property with an LLC which can then be sold, but this is a level of complication that many wholesalers want to avoid.
  • Assignors do not have owner’s rights. When the property is under contract, investors cannot make repairs or improvements. This makes it harder to assign a contract for a distressed property in poor condition.
  • It can be hard to confirm an end buyer is qualified. The end buyer is responsible for paying the agreed upon price set by the seller and assignor. Many lenders do not handle assignment agreements which usually means turning to all-cash end buyers. Depending on the market, they can be hard to find.

In the worst-case scenario, if a wholesaling deal falls through because the end buyer backs out, the investor or assignor is still responsible for buying the property and must follow through with the purchase agreement. If you do not, you are in breach of contract and lose the earnest money you put down.

To avoid this worst-case scenario, be prepared with a good buyer’s list. You should only put properties under contract that you consider a good deal and you can market to other investors or homeowners. You may be able to get more time by asking for an extension to the assignment of contract while you find another buyer or even turn to other wholesalers to see if they have someone who would be a good fit.

What is the difference between assignor vs assignee?

In an assignment clause, the assignor is the buyer who then assigns the contract to an assignee. The assignee is the end buyer or final buyer who becomes the owner when the transaction closes. After the assignment, contract rights and obligations are transferred from the assignor to the assignee.

What Is an assignable contract?

An assignable contract in real estate is a purchase agreement that allows the buyer to assign their rights and obligations to another party before the contract expires. The assignee then becomes obligated to meet the terms of the contract and, at closing, get title to the property.

Is Assignment of Agreement Legal?

Assignment of contract is legal as long as state regulations are followed and it’s an assignable contract. The terms of your agreement with the seller must allow for the contract to be assumed. To be legal and enforceable, the following general requirements must be met.

  • The assignment does not violate state law or public policy. In some states and jurisdictions, contract assignments are prohibited.
  • There is no assignment clause prohibiting assignment.
  • There is written consent between all parties.
  • The property does not have restrictions prohibiting assignment. Some properties have deed restrictions or anti-assignment clauses prohibiting assignment of contract within a specific period of time. This includes HUD properties, short sales, and REO properties which usually prohibit a property from being resold for 90 days. There is potentially a way around these non-assignable contracts using an LLC.

Can a non-assignable contract still be assigned?

Even an non-assignable contract can become an assignable contract in some cases. A common approach is creating an agreement with an LLC or trust as the purchaser. The investor can then assign the entity to someone else because the contractual rights and obligations are the entity’s.

Assignment agreements are not as complicated as they may sound, and they offer an excellent entry into real estate investing without significant capital. A transaction coordinator at Transactly can be an invaluable solution, no matter your volume, to keep your wholesaling business on track and facilitate every step of the transaction to closing – and your assignment fee!

Adam Valley

Adam Valley

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real estate assignment clause

What Is an Assignment Clause?

An assignment clause spells out which contractual obligations, rights, and duties may be transferred from one of the contractual parties to another party. 3 min read updated on February 01, 2023

Updated October 29, 2020:

An assignment clause spells out which contractual obligations, rights, and duties may be transferred from one of the contractual parties to another party. The assignment may be in whole or in part, and the clause also details the conditions under which a party can assign these duties.

U.S. law dictates that most contractual rights can be freely assigned or delegated, unless an agreement states otherwise.

The assignment clause often overlaps with two other clauses:

  • Parties in Interest
  • Successors and Assigns

These control who assumes contractual rights and obligations.

Legal Background and Freely Assignable Rights

When one party in a contract “assigns” the agreement to someone else, this means the first party — the assignor — transfers its contractual rights and obligations to the second party — the assignee.

In some instances, one party will not want the other contractual party to freely assign its duties. Contracts will then include language that states this.

One exception to the general assignability rule is intellectual property licenses . Legally, a licensor must first give consent before an IP licensee can assign or delegate its rights or obligations, even in the case where the license agreement is silent.

Requirements for Assignment Consent

There are different ways to say the same thing in a contract. Some people prefer lengthier statements, and others like to keep things brief. The following are various ways to make the same points.

  • One contractual party isn't allowed to assign its agreement to another person without prior written consent of the other contractual party, except as provided for in the contract. If an assignment is made without this consent, it won't be considered valid.
  • One party may not assign any interest or right arising out of this contract — in whole or in part — without prior consent.
  • To keep all doubts at bay, no consent is required for an assignment — including collateral, absolute, or other — for a contractual right to payment.

These are the takeaways from these stipulations:

  • This type of requirement for an assignment clause can create obstacles for the non-assigning party in corporate reorganizations or future mergers.
  • The party that's being asked to consent to an assignment clause requirement may want to negotiate its position. For instance, it may find negotiations helpful in a situation when the assignment involves a substantial sale.

A Party May Not Unreasonably Withhold or Delay Consent

It's not permissible to hold up consent to unreasonable delays.

Other ways to state this include:

  • To avoid doubt, a party that suffers damage due to the unreasonable delay or withholding of consent by the other party can treat them as direct damages.
  • To avoid doubt, damages that arise to one party from the unreasonable delay or withholding of consent by the other party aren't excluded from remedies.

Even when these provisions aren't in place, the law may still impose a reasonableness requirement. This requirement may not hold a lot of practical value, whether it's implied by the law or contractual. A reasonableness requirement can't guarantee that the non-assigning party will give consent when the assigning party wants it. By the time a case has worked its way through the court system to a decision, the deal that the assigning party was working on could have fallen through or otherwise be negated or moot.

However, this provision for unreasonable withholding should get the non-assigning party to carefully consider taking too much time due to the prospect of being held liable for damages. This can result in costly consequences.

On the other hand, having an unreasonable delay provision could create conflict with the provision concerning material breach of contract.

When you enter into a contract, it's important that you know what your rights and obligations are, as well as the other party's rights and obligations. If you don't want certain outcomes — assignment of duties, for instance — you must usually make it clear in the agreement. Getting help from a legal professional in the contract law field is a good idea when writing up a contract . That way, you increase the chances of covering everything you want covered, from the finer points to the bigger ones.

If you need help with contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Content Approved by UpCounsel

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  • Assignment Law
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  • Assignment of Rights and Obligations Under a Contract
  • Assignment of Rights Example
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  • Assignability Of Contracts
  • What Is the Definition of Assigns
  • Assignment Legal Definition
  • Delegation vs Assignment

Know Your Property

Understanding the Assignment Clause Q & A: How It Works in Contracts and Agreements

  • 24 July 2023
  • 10 min read
  • Assignee assignment clause Assignor Buying Property Buying Real Estate Contract modification Contractual transfer Knowing Your Property Q&A Real estate transaction
  • Pre Constructions
  • Understanding the Assignment C ...

real estate assignment clause

In real estate transactions, an assignment clause is a contractual provision that allows one party (the “assignor”) to transfer their rights, interests, or obligations under the contract to a third party (the “assignee”). The assignment clause provides the framework for how such transfers can take place and outlines the conditions and terms for the assignment.

It’s important for both buyers and sellers in real estate transactions to be aware of the assignment clause’s existence in the purchase agreement. Properly understanding and complying with the assignment clause can facilitate a smooth and lawful transfer of rights or ownership in the property.

An assignment clause is a legal provision that can be found in contracts and agreements. It outlines the conditions under which one party (the assignor) can transfer their rights, duties, or obligations under the contract to another party (the assignee). Assignment clauses are commonly used in a variety of contracts, including leases, loans, and business agreements. Understanding this clause is important, as it can have significant implications for all parties involved.

An assignment clause, found in various contracts and agreements, delineates the conditions under which one party can transfer their rights, obligations, or benefits to another party. This clause is pivotal because it affects the dynamics of the contractual relationship.

Typically, an assignment clause stipulates whether assignment is allowed and, if so, whether it necessitates the consent of the non-assigning party. This consent can be absolute or subject to reasonable conditions. In some cases, contracts explicitly forbid assignment, while others differentiate between assigning rights (e.g., payment entitlements) and duties (e.g., service obligations).

Understanding the assignment clause is essential as it carries significant legal and financial implications. Assignors might still be held liable if the assignee fails to meet obligations, and financial obligations may shift hands. Parties should carefully review this clause to ensure compliance and consider seeking legal advice when necessary, as it can have a lasting impact on the contract’s execution and outcomes.

Questions & Answers (Q & A)

Q: What is an assignment clause in a contract?

A: An assignment clause is a contractual provision that allows one party to transfer or “assign” their rights, benefits, and obligations under the contract to a third party, known as the “assignee.” This provision outlines the conditions and terms under which such transfers can occur.

Q: How does an assignment clause work?

A: When one party to the contract wishes to transfer their rights and obligations to another party, they must review the assignment clause to determine if it permits such transfers. In many cases, the assignor (the party making the assignment) must obtain the written consent of the other party to the contract before proceeding. Once the assignment is completed and the assignee assumes the rights and duties, the assignor is usually released from further obligations under the original contract.

Q: What are the key elements of an assignment clause?

A: The key elements of an assignment clause include:

  • Clearly defining the parties involved (assignor and assignee).
  • Stating the conditions under which assignments are allowed.
  • Specifying the procedures for seeking consent and providing notice.
  • Outlining the liabilities and obligations of the assignee after the assignment.

Q1: What are the typical conditions for assignment?

A1: The conditions for assignment can vary based on the specific contract and the intentions of the parties involved. Some common conditions include obtaining the consent of the other party, providing written notice of the assignment, and ensuring the assignee has the necessary qualifications to fulfill the obligations under the contract.

Q2: What are the requirements for making an assignment under the clause?

A2: The specific requirements for making an assignment under the clause are typically outlined in the contract. They may include obtaining the consent of the other party, providing written notice of the assignment, or complying with any conditions set forth in the clause. It is essential for the assignor to adhere to these requirements to ensure a valid and enforceable assignment.

Q3: Why are assignment clauses included in contracts?

A3: Assignment clauses are included in contracts to provide flexibility and allow parties to transfer their rights and obligations under the contract when needed. They can be beneficial in situations where a party wants to sell or transfer their interests in a project, business, or real estate property without entirely terminating the contract.

Q4: Are there any restrictions on assignments?

A4: Yes, some contracts may include restrictions or prohibitions on assignments. These restrictions are typically in place to protect the interests of the parties involved. For example, contracts involving personal services or unique skills may restrict assignments to ensure the intended parties are directly involved.

Q5: What happens if an assignment is not allowed or improperly executed?

A5: If an assignment is not allowed or not executed according to the terms of the assignment clause, it could result in a breach of contract. The party attempting to make the assignment may face legal consequences, and the other party may seek damages or take legal action to enforce the original contract.

Q6: Can an assignment clause be modified or negotiated in a contract?

A6: Yes, like any other contractual provision, the assignment clause can be negotiated and modified between the parties before the contract is finalized. Parties may choose to include specific language or conditions regarding assignments to suit their particular needs and interests.

Q7: What happens to the original party after the assignment is made?

A7: Once the assignment is completed and the assignee assumes the rights and obligations, the original party (assignor) is generally released from any further duties under the contract. The assignee becomes the new party responsible for fulfilling the terms of the agreement.

Q8: Should legal advice be sought before making an assignment?

A8: Yes, seeking legal advice is highly recommended before making an assignment or responding to an assignment request. An attorney can review the contract, assess the implications of the assignment, and ensure that all legal requirements are met to avoid potential disputes or breaches of contract.

Q9: What is the significance of the assignment clause in a real estate contract, and why is it crucial for both buyers and sellers to be aware of its implications?

A9: The assignment clause in a real estate contract outlines whether the buyer can transfer their rights and obligations to another party. It is crucial for both buyers and sellers to understand this clause as it can impact the transaction’s dynamics. For sellers, it can determine if the buyer can assign their purchase agreement to another party. Buyers need to know if they have the flexibility to assign their contract to someone else. Being aware of the assignment clause’s implications ensures all parties involved in the transaction are on the same page and that the process proceeds smoothly.

Q10: In what situations might a buyer or seller want to exercise their rights under the assignment clause, and how does this affect the real estate transaction?

A10: Buyers might want to exercise their rights under the assignment clause if they are unable to complete the purchase themselves, perhaps due to a change in circumstances. Similarly, sellers might allow the assignment if they are open to selling to another party. The key is to understand that the assignment clause can lead to a change in the buyer, which could affect the deal’s terms or timeline. Both buyers and sellers should assess the potential impact of an assignment on the transaction and decide if it aligns with their goals.

Q11: Can real estate brokers play a role in helping clients navigate assignment clauses, and how can they assist in this regard?

A11: Real estate brokers can certainly play a valuable role in helping clients understand assignment clauses. They can explain the clause’s terms, implications, and its importance. Brokers can facilitate communication between buyers and sellers regarding assignments and help negotiate terms that are acceptable to both parties. Their expertise in contract interpretation and negotiation can be instrumental in ensuring that the assignment process, if it occurs, is conducted smoothly and in compliance with the contract.

Q12: What are the potential legal and financial risks involved with assignment clauses in real estate transactions, and how can these be mitigated?

A12: Legal and financial risks in real estate assignments can include potential disputes, unexpected liabilities, or financial implications. To mitigate these risks, it’s essential to have clear and well-defined assignment terms within the contract. Engaging a real estate attorney to review the assignment clause can help ensure its legality and enforceability. Additionally, conducting thorough due diligence on the assigned party and their financial capacity can reduce financial risks.

Q13: How does the presence or absence of an assignment clause affect the marketability and flexibility of a property in the real estate market?

A13: The presence or absence of an assignment clause can impact a property’s marketability and flexibility. Properties with more flexible assignment clauses might appeal to a broader range of potential buyers, including those who might consider an assignment. On the other hand, properties without an assignment clause might appeal to buyers seeking more control over the transaction. It’s essential for sellers to work with their real estate brokers to determine the right approach for their property, considering market demand and their own preferences.

Q14: How can real estate professionals, such as brokers and agents, help clients draft or negotiate assignment clauses to better protect their interests?

A14: Real estate professionals can collaborate with clients to draft or negotiate assignment clauses that protect their interests. They can ensure that the language is clear and specific, addressing the conditions under which assignments are allowed and any consent requirements. Brokers and agents can also help clients define any limitations, timeframes, or potential consequences related to assignments. The goal is to create an assignment clause that aligns with the client’s objectives and provides legal protection.

Q15: In the context of real estate investments, how does understanding and effectively using assignment clauses contribute to a more flexible and profitable investment strategy?

A15: For real estate investors, understanding and effectively using assignment clauses can enhance investment flexibility and profitability. Investors can use assignment clauses to capitalize on market opportunities by allowing the transfer of purchase agreements to other investors or entities. This flexibility can help investors quickly exit deals or capitalize on changing market conditions. However, it’s crucial to navigate assignment clauses with a clear understanding of the legal and financial implications to maximize profitability while minimizing risks.

Q16: What potential challenges or disputes might arise regarding assignment clauses in real estate transactions, and how can these be resolved or prevented?

A16: Challenges or disputes in real estate transactions related to assignment clauses can arise when one party wishes to assign the contract, and the other party disagrees or when the terms of the assignment are unclear. To prevent or resolve such issues, it’s crucial to have a well-drafted assignment clause that clearly outlines the process and conditions. Communication between all parties is essential to avoid misunderstandings. If disputes do occur, mediation or negotiation might be used to reach a resolution, and in some cases, legal action may be necessary. The best prevention, however, is to have a well-crafted contract that anticipates and addresses potential issues.

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Understanding Assignment Clauses in Contracts

Nov 22, 2023 | Contracts

Contracts are an integral part of our daily lives, governing a wide range of transactions from buying goods and services to entering into employment agreements. One often-overlooked yet crucial aspect of contracts is the assignment clause. Understanding assignment clauses is essential for individuals and businesses alike, as they can significantly impact the parties involved. In this comprehensive guide, we will explore the intricacies of assignment clauses, their significance, and how they can affect contractual relationships.

What is an Assignment Clause?

An assignment clause, also known as a delegation clause, is a provision in a contract that dictates whether one party (the assignor) can transfer its rights, obligations, or both to another party (the assignee). In simpler terms, it outlines whether the original parties to the contract can delegate their responsibilities or transfer their benefits to a third party.

Key Components of Assignment Clauses:

Consent Requirement:

Some contracts explicitly state that an assignment can only occur with the consent of all parties involved. This ensures that no party is forced into a relationship with an unknown or potentially undesirable third party.

Prohibition of Assignment:

Conversely, some contracts expressly prohibit assignment altogether. In such cases, the parties to the contract are obligated to fulfill their roles personally, without the option to transfer their obligations or benefits.

Automatic Assignment:

In certain instances, contracts may include automatic assignment clauses. This means that rights and obligations are automatically transferred to a third party without the need for explicit consent.

Notice Requirements:

Assignment clauses often include provisions regarding notice requirements. These stipulate that the assignor must inform the other party or parties involved in the contract about the assignment, providing transparency and an opportunity for objection if necessary.

Significance of Assignment Clauses:

Risk Management:

Assignment clauses play a crucial role in risk management. For the party assigning its rights or obligations, it’s a way to mitigate potential risks and liabilities associated with the contract.


From a business perspective, assignment clauses offer flexibility. They allow companies to adapt to changing circumstances, such as mergers, acquisitions, or restructuring, without the need to renegotiate every existing contract.

Investment and Financing:

Assignment clauses are of particular importance in financial transactions. Lenders and investors often look for the ability to assign contractual rights as a way to secure their interests.

Contractual Relationships:

Understanding assignment clauses is crucial for maintaining healthy contractual relationships. When parties are aware of the potential for assignment, they can negotiate terms that protect their interests and maintain the intended balance in the contract.

Common Misconceptions:

Assumption of Liabilities:

One common misconception is that by assigning contractual rights, the assignor is automatically relieved of all liabilities. In many cases, unless explicitly stated otherwise, the assignor may still be responsible for fulfilling the contractual obligations.

Unilateral Assignment:

Parties often assume they can unilaterally assign their rights or obligations. However, many contracts require the consent of all involved parties before an assignment can take place.

Case Studies:

To illustrate the practical implications of assignment clauses, let’s examine a couple of hypothetical scenarios:

Real Estate Transactions:

In real estate, assignment clauses are commonly used. For example, if a buyer signs a purchase agreement and later decides to sell the property before closing, the assignment clause dictates whether such a transfer is allowed and under what conditions.

Business Contracts:

In a business context, consider a company that enters into a service agreement with a third party. If the company undergoes a merger, the assignment clause becomes critical in determining whether the rights and obligations under the service agreement can be transferred to the newly formed entity.


Understanding assignment clauses is fundamental for anyone entering into a contract, whether as an individual or a business entity. These clauses have far-reaching implications, influencing the flexibility, risk management, and overall dynamics of contractual relationships. By carefully considering and negotiating assignment clauses, parties can ensure that their interests are protected and that the contract remains adaptable to the ever-changing landscape of business and personal transactions.

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Assignment Clause in a Real Estate Contract: What to Know

Assignment Clause

An assignment clause in a real estate contract allows an investor to sell a property without buying it. There is a lot to unpack in that simple sentence, so let us examine why a seller, an investor (or wholesaler), and a buyer may want to enter into such an agreement. 

  • An assignment clause in real estate allows an intermediary to grant the privileges and responsibilities of a contract to another person. 
  • People make money assigning contracts by brokering deals between motivated sellers and dependable investors.  

There is a lot of legwork that goes into finding appropriate properties. However, the transactions themselves usually happen very quickly.  

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How Does an Assignment of Contract Work? 

What does assignment mean in a contract? An assignment grants the benefits and responsibilities of a contract from one party to another. Investors use these contracts to ensure they get paid when they broker real estate deals. 1   

What is an Assignment Clause in a Real Estate Contract? 

The assignment clause in a real estate contract is the vehicle that allows wholesalers, or intermediaries, to broker deals in real estate. There are three important parties in the clause: 

  • The assignor – The seller  
  • The obligor – The investor or wholesaler 
  • The assignee – The buyer 

This allows the obligor to be a legal party to the contract. It allows compensation for the investor (the obligor), who acts as the middleman. 

What if There is No Assignment Clause in a Real Estate Contract? 

Can you assign a contract without an assignment clause? Most of the time yes. In most states, if the contract does not specifically forbid it then a buyer may assign the contract to another buyer. However, be careful. If you do not include the clause in the sales contract, then you should draft a contract stipulating your assignment fees with the new buyer.  

Difference Between Assignment and Novation 

The difference between an assignment and a novation is subtle but important. With an assignment, the obligor transfers the benefits and obligations of the existing contract to a third party. No change is made to the contract. In the case of a novation, the investor substitutes one buyer for another.  

To novate a contract, the assignor (the seller) must agree to a change in the contract. That is not necessarily true in the case of assignment. The 0bligor may assign an assignee (the new buyer) and not make any changes to the contract.  

How do You Make Money Assigning Real Estate Contracts? 

This real estate investment strategy works when you broker a deal between a motivated seller and an investor. It is a niche market that requires you, as the broker, to find the right seller and match them with an appropriate buyer. But what kind of seller? And what kind of buyer? 2   

What Sellers You Should Approach with an Assignment Contract 

Not every seller is interested in this type of transaction. Finding the right seller of an appropriate property is crucial. You must find a motivated seller who thinks it is more important to sell quickly than get the most money.  

This is a proactive process. You must find them before they find another interested buyer or broker. Here are some ways brokers find these buyers: 

  • Email marketing 
  • Direct mail marketing 
  • Putting out signs in a target neighborhood 

With this campaign, you look for the seller who tells you “I have to sell because . . .” as opposed to “I’m curious about what my house may be worth.” 

What Buyers You Should Approach with an Assignment Contract 

When you find a motivated buyer, who wants to sell an appropriate property it is important to already have an interested seller or sellers, you can call. If you do not have a dependable buyer ready to go you will lose the deal, because someone else will buy. What does a good buyer look like in this case? 

  • Someone with experience buying investment properties. 
  • Someone who can close quickly. 
  • A professional who is consistent and decisive. 

The buyer must act quickly. This means they pay cash or have financing lined up ahead of time and can close quickly. Indecisive people will either not act quick enough or get cold feet and back out of the deal. In the latter case that could leave you in a precarious position. You either must buy the property yourself or forfeit your earnest money.  

The best thing to do is find an investor you trust before you find a motivated seller. Going to investing chat rooms is a good place to start if you do not know anyone personally.  

Final Thoughts on An Assignment Clause in a Real Estate Contract 

Assignment contracts may seem like an easy investment strategy on the surface, but it requires a lot of research. You must know real estate values in your area very well and be willing to do a lot of legwork finding undervalued properties with motivated sellers. That is not easy, and there is a lot of competition.  

On the other side of the transaction, you must cultivate a stable of reliable investors. This takes even longer because you must develop trust with them. You must trust them to complete the transaction, and they must trust you to find them good investments. One bad deal can sour a relationship. Also, not every investor is ready when you find a property, so you must gather a stable of investors so that one will be ready when you call with a hot deal.  


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What Is an Assignment of Contract? [How It Works In Real Estate]

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What Is an Assignment of Contract?

What Is an Assignment of Contract?

One intriguing strategy in real estate investing that often stirs interest among newbie investors is the assignment of contracts. This approach, which allows an investor to pass the contractual rights and obligations of a property purchase contract to another buyer, is seen to provide highly profitable opportunities.  

If you are an investor who wants to try this technique to achieve financial freedom, this blog is for you! Here, we'll delve into the nitty-gritty of contract assignment, explaining its mechanism, benefits, potential pitfalls, and the crucial steps involved. We hope that after reading this blog, you can navigate the real estate market with confidence!

What Is an Assignment of a Contract in Real Estate?

What Is an Assignment of a Contract in Real Estate?

In real estate wholesaling, an investor agrees to buy a personal property, often at a below-market price, then assigns the contract to a different buyer, often another investor, for a higher price. 

The difference between the contracted price and the price paid by the end buyer represents the wholesaler's profit, known as the assignment fee. 

For example, an investor might secure a contract to purchase a personal property for $100,000, then find an end buyer or new party willing to pay $120,000 for the same property. By assigning the contract to the end buyer, the investor earns a $20,000 assignment fee. 

However, it's crucial to note that not all real estate contracts can be freely assigned. Some contracts may include a "no assignment" clause that prevents the transfer of the contract to another party. 

Thus, an investor needs to ensure that assigning contractual rights is allowed before proceeding with this strategy. If an assignment clause is not present in the contract, the investor may need to negotiate with the original party or owner to include in the contract rights it or find an alternate method to transfer the property to a new party.

In essence, an assignment contract is a way for real estate investors to connect sellers and buyers, while generating a profit from the transaction without needing to purchase, own, or manage the property themselves. It's a strategy that requires careful planning, thorough due diligence, and an understanding of real estate laws and market conditions.

Assignment Contract vs. Double Closing

Assignment Contract vs. Double Closing

Both assignment contracts and double closings are strategies used in real estate investing, particularly wholesaling, but they function differently.

As previously discussed, an assignment of contract involves the wholesaler (assignor) transferring their contractual rights in a property purchase agreement to another party (assignee), typically another investor. 

The wholesaler never actually purchases the property . Instead, they sell their contract to buy the property. The assignee pays an assignment fee to the wholesaler, then proceeds to close the deal with the original seller. In this arrangement, the end buyer is aware of the wholesaler's profit.

Meanwhile, double closing , also known as a "simultaneous close," involves the wholesaler actually purchasing the property before quickly reselling it to the end buyer. This is perhaps the main difference between the two.

Essentially, there are two separate transactions: one where the wholesaler buys from the original seller and another where the wholesaler sells to the end buyer. 

Both transactions of the contract occurs back-to-back, even on the same day. The wholesaler uses the funds from the end buyer to pay the original seller and keeps the difference as profit. This approach allows the wholesaler's profit to remain hidden from all parties.

Is an Assignment Contract Considered Legal?

Is an Assignment Contract Considered Legal?

Yes, an assignment contract is generally considered legal in real estate transactions. It is a common practice, especially in real estate investing and wholesaling.

However, the legality can depend on several factors, including the terms of the original contract and the laws in a particular area.

Some contracts may disallow assignment through a clause that "prohibits the assignment of the contract without the consent of the other party." In such cases, assignment of the written contract without consent would violate public policy and could potentially lead to legal repercussions. This may also encourage litigation.

Additionally, while an assignment contract is generally legal, some states in the U.S. have specific rules and regulations about how real estate contract assignments and wholesaling, more generally, should be conducted. 

Some require specific disclosures to be given to the other party to the contract or have particular rules about how the transaction can be advertised. Some do not also allow material alteration, In some jurisdictions, regular wholesaling activity might require a real estate license, contract expiration date for commercial contracts, etc.

Pros and Cons of Assignment of Contract in Real Estate

Pros and Cons of Assignment of Contract in Real Estate

The assignment of contracts in real estate comes with its own set of advantages and disadvantages, which investors need to consider carefully before entering any deal.

To help you decide if this real estate investing strategy is indeed for you, read the following pros and cons.

Pros of Assignment of Contract

Pros of Assignment of Contract

  • Less Capital Required: Because the wholesaler is simply assigning the contract and not actually purchasing the property, less capital is required compared to traditional real estate transactions.
  • Profit Potential: Assigning a contract can be profitable, especially when properties are secured under market value and the seller and buyer guarantees performance. The difference between the contract agreement price from the assignee and the purchase price the end buyer pays can result in significant earnings.
  • Faster Transactions: Assignments often lead to faster transactions as the assignor is not taking possession of the property. They don't have to do heavy obligations such as a title search, contact a company to make repairs, etc. Once a suitable assignee is found, the existing contract can be assigned and the transaction completed.

Cons of Assignment of Contract

Cons of Assignment of Contract

  • Dependent on Buyers: Wholesalers are reliant on finding end buyers and getting a closing date. If an assignee can't be found in time, the wholesaler may be forced to back out of the deal or risk legal consequences.
  • Limited Control: The wholesaler doesn't own the property and therefore has limited control over it. They can't make improvements or changes to increase its value since it isn't part of their obligations.
  • Transparency of Profit: In an assignment, the assignee can see how much profit the assignor is making, which could potentially lead to negotiations or dissatisfaction in the obligations. But, of course, the assignor warrants that the fee is fair.
  • Legal Considerations: You cannot assign rights to all types of contracts, and the federal government law may have specific regulations around how assignments work. Wholesalers must be aware of the legal landscape to ensure they conduct business following the law and that the two parties they will involve know the legal term of transfer.

Steps in Contract Assignment in Real Estate

Steps in Contract Assignment in Real Estate

Contract assignment in real estate can be a profitable strategy when done correctly. Each step in this process requires careful attention to detail and due diligence so as not to break the law. It is ideal to consult with a real estate attorney or other professionals before doing any transfer of property.

Nevertheless, here are the steps typically involved in a contract assignment in real estate.

Step 1. Find the Right Investment Property

The first step in contract assignment is identifying a suitable investment property. You need to find a property that can be purchased under market value and resold at a profit. 

This could be a distressed property, a foreclosed property, or simply a property that a seller needs to unload quickly. Market research and property analysis are critical at this stage.

Step 2. Prepare the Real Estate Contract 

Once a property has been identified, you need to prepare a real estate purchase agreement. This is the contract agreement that you will eventually assign to another buyer. It's crucial that this original contract either expressly allows for assignment or at least does not prohibit it.

If you are using a template from others or it has a trade name, make sure you are not going against the intellectual property law. There are already certain claims in the past about this, so be cautious.

Step 3. Submit the Contract

After preparing the original contract, it needs to be submitted to the seller. The seller may accept the contract as is, reject it outright, or propose changes. If changes are proposed, negotiations will take place until an agreement is reached. 

Step 4. Find an End Buyer Who Will Accept the Contractual Obligations

With an accepted contract in hand, you can now seek an end buyer to whom the contract will be assigned.

This could be another investor or a traditional homebuyer. Marketing the original contract can involve networking, advertising on real estate platforms, or working with a real estate agent.

Step 5. Assign the Contract to an End Buyer

After identifying an end buyer, you will assign or transfer the existing contract agreement to them (this may be an individual or a real estate company).

This involves an assignment agreement, which transfers your contractual rights and obligations under the original purchase contract agreement to one party or the end buyer (real estate company or investor).

The assignment agreement should clearly outline the original terms of the assignment, including the assignment fee that you, as the assignor, will receive.

Step 6. Collect the Fee

After the assignment agreement has been signed and transferred on the closing date, you can collect the assignment fee from one party. This is your profit from the assignment contract transaction.

The closing process then proceeds between the original seller and the end buyer, without any further involvement on your part. The property ownership will be transferred to the end buyer and you would no longer have any responsibilities or duties with them.

Final Thoughts: What are Assignment Contracts? [How Does Assignment of Contract Work in Real Estate]

Whether you're a seasoned real estate wholesaler or just starting, it's clear that understanding assignment contracts and how they function within the real estate sector can open doors to new opportunities and potentially profitable ventures. 

With the right approach, a keen understanding of the property market, negotiation skills, thorough due diligence, and creativity, these contracts can be your main income stream.

If you want to find leads on properties that you can assign to another buyer, reach out to us at Property Leads . We offer highly motivated seller leads in your target area for a very reasonable price. We guarantee a high conversion rate since we generate our leads through SEO.

Fill out our form below to start finding the best contract reassignment deals!


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How escalation clauses work

Risks and considerations, how to craft an effective escalation clause.

  • Escalation clause in 2024

Understanding Escalation Clauses in Real Estate Contracts

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  • Escalation clauses incrementally increase your offer on a home if the seller receives higher bids, up to a maximum price.
  • Including one in your purchase offer can help you stay competitive without overpaying for a home.
  • This isn't always the best strategy, so work with your real estate agent to determine how you should craft your offer.

In a hot housing market , crafting the perfect offer can greatly improve your chances of getting the house you want.

Homebuyers are often asked to submit their "highest and best" offer when making a bid to purchase a home. But most buyers don't have unlimited funds to work with, and submitting an offer that's too high puts them at risk of overpaying for a home. 

Including an escalation clause in your real estate purchase contract can help keep your offer competitive while avoiding paying more than you need to secure the deal. Here's how these clauses work.

Definition of an escalation clause in real estate

When used in a real estate purchase contract, an escalation clause lays out how much a buyer is willing to increase their offer if the seller receives higher offers from other buyers. 

When and why escalation clauses are used

An escalation clause can help a buyer remain competitive when a home they want receives multiple offers without having to worry about paying more if they don't have to. Whether including one with your offer actually helps you achieve these goals is very dependent on the circumstances of the home sale and any other offers the seller receives.

"On the plus side, it can help your bid stay competitive and stay within a determined range , " says John Walkup, co-founder of real estate data analytics company UrbanDigs . "On the minus side, you've shown the seller your max price."

If you're wondering if you should include an escalation clause in your offer, talk to your  real estate agent . They should be able to gather some intel on the sale and get an idea of whether an escalation clause could help or hurt. 

Key components of an escalation clause

An escalation clause will include three things:

  • How much you're willing to pay above a competing offer
  • The maximum amount you'll pay for the home

The escalation clause should also specify that the seller must provide copies of the other offers to prove that they've received higher bids.

This will all be included in the contract you send to the seller, along with all the other details of your offer.

Escalation clause example

Say you're submitting an offer on a $250,000 home. Your initial offer is for $250,000, but you also include an escalation clause stipulating that you'll pay $3,000 more than any competing offers that are higher than yours. You'll ultimately pay up to $270,000 for the home. 

If the seller receives no other offers, then the most you'll have to pay is your original $250,000 offer.

After you submit your offer, the seller receives another one for $255,000. Per your escalation clause, your offer is now bumped up to $258,000. If the seller accepts your offer now, that's the amount you'd pay for the home.

But the seller receives a few more offers, the highest of which is $280,000. Because this exceeds what you said you were willing to pay, you're no longer in the running to buy the home. 

Benefits of using an escalation clause when buying a house

An escalation clause can show the seller that you're truly interested in purchasing the home. From the seller's perspective, the more motivated you are, the less likely it is that the deal will fall through. This can make your offer more attractive.

By employing an escalation clause, you can also be sure that you're sticking to your budget and avoid any heat-of-the-moment bidding wars. 

These clauses can also help you avoid overpaying for a home. Since you don't know how much other buyers are going to offer, an escalation clause ensures that you're only paying a certain amount above other offers. And if the home doesn't have any other competing offers, you'll only pay your initial offer amount. 

However, there are situations where including an escalation clause in your offer could ultimately hurt you. There are even some circumstances where you could end up paying more than you would have without the clause. 

Potential for overpaying

A home's sales price is separate from its market value. Once an offer is accepted, the buyer's mortgage lender will order an appraisal to determine what the home is actually worth.

A home appraisal is a report that states what a property's fair market value is based on recent similar home sales. If you make an offer with or without an escalation clause that is higher than the home's appraised value, you'll need to either overpay for the home, negotiate with the seller, or walk away. If you're using a mortgage and want to move forward, you'll need to bring more of your own cash to the transaction. 

The higher you bid, the more likely you are to overpay. When determining the maximum amount you'll pay, talk with your real estate agent about whether the home is realistically worth what you could end up paying for it.

Be sure your max bid is also in line with your monthly housing budget. Don't take on a bigger mortgage payment than what you can afford.

"Keep in mind that while an escalation clause can make your offer more competitive, it's essential to set a reasonable cap to avoid exceeding your budget," says Michael Yehuda, a real estate agent with Coldwell Banker Warburg

Another concern: You outbid offers that aren't as good as your initial, lower offer.

Sellers don't always pick the highest offer they receive. Let's go back to our previous example:

You make your initial offer of $250,000 with an escalation clause to outbid higher offers by $3,000, up to $270,000. In addition to your offer, the seller also receives one for $260,000, so your bid automatically goes up to $263,000. But perhaps this other bid is from someone who doesn't have a strong mortgage preapproval , or their offer includes a lot of contingencies. Even without the escalation clause, the seller might still go with your offer if they feel it's ultimately more attractive.

With the escalation clause, you potentially paid $13,000 more than you had to.

It could put you at a disadvantage

When you include an escalation clause in your offer, you're telling the seller your highest possible offer right out of the gate. This can limit your negotiating power. 

Additionally, some sellers won't accept offers that include escalation clauses. So you may be limited in the homes you can make these types of bids on. 

The best way to craft a successful escalation clause it to work closely with your real estate agent. They should be an expert in the local housing market, so they can tell you if an escalation clause is likely to increase your odds of success.

They'll also be able to talk to a property's listing agent to find out the process the seller is using to review offers.

Escalation clause in 2024: How it could help you buy a house this year

Mortgage rates should go down a bit this year , which may boost homebuying demand and increase competition among buyers.

If you're buying in a hot market, an escalation clause can give you the edge you need to get into a home.

"In a competitive real estate market like New York City, an escalation clause can still be beneficial, given the high demand and limited inventory," says Yehuda. "However, it's crucial to assess the market trends and consult with a local real estate professional to determine the most effective strategy."

Escalation clause FAQs

When you submit an offer to purchase a home, you can include in the contract an escalation clause that stipulates you're willing to pay more than other competing offers a seller receives, up to a maximum price.

Escalation clauses can help you stay competitive as a buyer, while helping you avoid overpaying for a home.

An escalation clause could lead you to pay more for the home than its appraised value. You could also end up outbidding offers that are weaker than your initial, lower offer.

Work with your real estate agent to determine if an escalation clause is appropriate for the property you're trying to purchase. Be sure you can afford the higher price, even if it ends up at your maximum amount. 

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Home & House Stagers in Elektrostal'

Location (1).

  • Use My Current Location

Popular Locations

  • Albuquerque
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  • Elektrostal', Moscow Oblast, Russia

Featured Reviews for Home & House Stagers in Elektrostal'

  • Reach out to the pro(s) you want, then share your vision to get the ball rolling.
  • Request and compare quotes, then hire the Home Stager that perfectly fits your project and budget limits.

A home stager is a professional who prepares a house for sale, aiming to attract more buyers and potentially secure a higher selling price. They achieve this through the following techniques:

  • Rearranging furniture to optimize space and functionality.
  • Decluttering to create a clean and spacious look.
  • Making repairs to address visible issues.
  • Enhancing aesthetics with artwork, accessories, and lighting.
  • Introducing new furnishings to update the style.

Their goal is to present the house in the best light. Home stagers in Elektrostal' help buyers envision themselves living there, increasing the chances of a successful sale.

  • Home Staging
  • Decluttering
  • Furniture Selection
  • Space Planning
  • Art Selection
  • Accessory Selection

Benefits of the home staging in Elektrostal':

  • Attractive and inviting: Staging creates a welcoming atmosphere for potential buyers.
  • Faster sale: Homes sell more quickly, reducing time on the market.
  • Higher sale price: Staging can lead to higher offers and appeal to a wider range of buyers.
  • Showcasing best features: Strategic arrangement highlights positives and minimizes flaws.
  • Stand out online: Staged homes capture attention in online listings.
  • Emotional connection: Staging creates a positive impression that resonates with buyers.
  • Easy visualization: Buyers can easily picture themselves living in a staged home.
  • Competitive advantage: Staging sets your home apart from others on the market.
  • Affordable investment: Cost-effective way to maximize selling potential and ROI.
  • Professional expertise: Experienced stagers ensure optimal presentation for attracting buyers.

What does an Elektrostal' home stager do?

What should i consider before hiring an interior staging company, questions to ask potential real estate staging companies in elektrostal', moscow oblast, russia:, business services, connect with us.


  1. Assignment Clause: Meaning & Samples (2022)

    Assignment Clause Examples. Examples of assignment clauses include: Example 1. A business closing or a change of control occurs. Example 2. New services providers taking over existing customer contracts. Example 3. Unique real estate obligations transferring to a new property owner as a condition of sale. Example 4.

  2. Assignment Clause

    Assignment Clause Example. This is an example of a real estate contract assignment clause: "The Buyer reserves the right to assign this contract in whole or in part to any third party without further notice to the Seller; said assignment not to relieve the Buyer from his or her obligation to complete the terms and conditions of this contract should be assigning default."

  3. Assignment of Contract In Real Estate Made Simple

    The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself. The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers).

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    A16: Challenges or disputes in real estate transactions related to assignment clauses can arise when one party wishes to assign the contract, and the other party disagrees or when the terms of the assignment are unclear. To prevent or resolve such issues, it's crucial to have a well-drafted assignment clause that clearly outlines the process ...

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    Yes, an assignment contract is generally considered legal in real estate transactions. It is a common practice, especially in real estate investing and wholesaling. However, the legality can depend on several factors, including the terms of the original contract and the laws in a particular area.. Some contracts may disallow assignment through a clause that "prohibits the assignment of the ...

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