real property law assignment

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• Property Lessons This Subject Area Index lists all CALI lessons covering Property Law.
• Lesson 1: Basic Future Interests: The Concept of "Future Interest" This lesson is part of a series of exercises covering Basic Future Interests. While the 10 lessons comprising this series can be worked in any sequence, the lessons do to some degree build on each other. Thus, it is suggested that students work them in order.
• Covenants of Title and Types of Deeds This lesson is designed to teach a student about the various types of covenants of title in deeds and the different types of deeds arising from the covenants they contain. Students who are unfamiliar with real covenants are advised to review the CALI lessons related to real covenants before trying this lesson.
• Distinction Between Real Property and Personal Property This lesson provides an introductory overview of the distinction between real property and personal property, including the historic origins of the distinction, the consequences of attaching things to land and severing things from land, the significance of fixtures, and examples of intangible property classified as real or personal property.
• Easements Defined This lesson introduces the law of easements by describing the typical scenario in which the need for an easement arises, examining alternatives to the creation of an easement, offering a legal definition of an easement, and summarizing the key sub-issues that arise in this legal area.
• The Estate System This lesson and Basic Future Interests are designed to provide a comprehensive interactive tutorial with a scope corresponding to the usual coverage of estates and elementary future interests in the typical first-year property course. They are designed to be useful either for review or as a "first learning exposure" to the subjects covered. The lessons consist of text screens that are regularly interleaved with questions to stimulate thought and reinforce students' learning as they go. Frequent questions are intended to help maintain interest as well as to help students become familiar with new vocabulary and concepts.
• Landlord and Tenant: An Introductory Lesson This lesson provides an introductory overview of landlord-tenant law, including: the historical origins of non-freehold estates; basic vocabulary of landlord-tenant law, including the concept of rent; the significance of leases as a mechanism for gaining the right to use and possess land; and the conveyance and contract theories of landlord-tenant law as alternative approaches for fashioning legal rules.
• Problems in Property Law Series I This series of three lessons consists chiefly of hypothetical factual situations designed to reinforce the student’s skills in applying the major principles and precepts of basic property law. The student is expected to determine the correct answers by reasoning from hypothetical facts through the applicable precepts and principles, rather than merely being able to identify the rules that apply. The program responds to student answers by suggesting, in windows on the screen, reasons which make the correct answers correct and the wrong answers incorrect. Use of these programs is even more effective in discussion groups of two or three, where the reasoning can be aired before answering.
• Problems in Property Law Series II This series of three lessons consists chiefly of hypothetical factual situations designed to reinforce the student’s skills in applying the major principles and precepts of basic property law. The student is expected to determine the correct answers by reasoning from hypothetical facts through the applicable precepts and principles, rather than merely being able to identify the rules that apply. The program responds to student answers by suggesting, in windows on the screen, reasons which make the correct answers correct and the wrong answers incorrect. Use of these programs is even more effective in discussion groups of two or three, where the reasoning can be aired before answering.
• Problems in Property Law Series III This series consists chiefly of hypothetical factual situations designed to reinforce the student's skills in applying the major principles and precepts of basic property law. The student is expected to determine the correct answers by reasoning from hypothetical facts through the applicable precepts and principles, rather than merely being able to identify the rules that apply. The program responds to student answers by suggesting, in windows on the screen, reasons which make the correct answers correct and the wrong answers incorrect. Use of these programs is even more effective in discussion groups of two or three, where the reasoning can be aired before answering.
• Rule Against Perpetuities PodCast Professors Brown and Grohman offer tips for mastering this complicated doctrine and explain the real-world reasons why students and attorneys need to understand the rule against perpetuities. This podcast discusses material covered in greater depth in Prof. Grohman's related lessons.

Online Study Aids are accessible within the library.  Note that off-campus access requires EZproxy login with your NCCU username and password.  For more information visit the  Online Study Aid Collections  webpage.

The resources below are just a few of the many resources available to assist with studying for criminal law.  To locate more resources, search the  Library's Online Catalog  using search terms related to property law or subject headings.

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• Last Updated: Feb 22, 2024 5:46 PM
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2022 New York Laws RPP - Real Property Article 12 - Registering Title to Real Property 418 - Assignment of Mortgage, Lease, or Other Lien or Charge.

§ 418. Assignment of mortgage, lease, or other lien or charge. The holder of any mortgage, lease, or other lien or charge on registered property, in order to transfer the same or any part thereof, shall execute an assignment of the whole or any part thereof; and upon such assignment being filed in the office of the registrar, the registrar shall enter in the title book a memorial of such transfer with a reference to the assignment by its file number; he shall also note upon the instrument on file in his office intended to be transferred, and upon the registration copy thereof produced, the number of the certificate on which the memorial is entered, with the date of the entry.

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Contract Law: Property Law in Contractual Obligations

In the complex world of legal frameworks, the interplay between contract law and property law is both fascinating and crucial for professionals navigating the fields of real estate, intellectual property, and beyond. Understanding this relationship not only empowers legal practitioners but also entrepreneurs, investors, and anyone involved in the drafting, negotiating, or executing of contracts related to property.

Property law addresses the rules and statutory requirements related to the ownership and transfer of property. This can include real property, like land and buildings, and personal property—both tangible items like goods and intangible ones like intellectual property rights.

Contract law governs how agreements between parties are formed, interpreted, and enforced. It's the backbone of commercial dealings, ensuring that parties can rely on the commitments they make to each other. Contracts can range from simple purchase agreements to complex multi-party joint ventures, each with its nuances and legal requirements.

This post explores how contract law and property law work together and the different ways they interact.

Common Property-Related Provisions in Contracts

Contracts are often used to set the terms and record the understanding of property transactions. These include the sale of property, restrictions on the use of property, the lease of property and more. However, the rules of property law differ in small areas from the rules of contract law. You can particularly see this when the eternal nature of property meets contractual obligations in breach of contract.

Sale and Purchase Agreements and Penalties Such as Specific Performance

Under the Statute of Frauds, most states require the “sale and purchase agreements” for real estate to be in writing. This makes their contractual nature easy to see. This document finalizes the terms and conditions of the sale and assignment of contract rights. It also lays out the terms and conditions that apply after they sign the document but before they complete the sale. Realtors are careful when drawing up contracts to cover most contingencies. If the matter goes to court over breach of contract, the parties may be required to perform their contractual obligations, including specific performance, if that is just. 1

Property Use and Restrictions

Parties often contract for property use and restrictions on it. Deeds record these non-possessory interests as restrictive covenants. Covenants, such as home color restrictions and landscape requirements, are listed in homeowners association documents as contractual obligations. The contract may list specific performance as the remedy, and your client may have to repaint their house or re-landscape their yard.

The city can exercise contracts, as with zoning laws and building codes. Easements may offer another party a pathway through your property, such as a utility easement running electric lines to your house. A lien is a loan, the payment of which is tied to the sale of your property. They write these limitations into the land deed.

Changing or eliminating deed restrictions is difficult to nearly impossible. A few will expire over time, but most will not. The seller has to disclose deed restrictions as part of the sales contract, and the buyer should look over them carefully. 2 These restrictions can outlive the parties who originally signed the contract, and as such, they become subject to property law and are not simply contracts. 3

Landlord-Tenant Contracts and Lease Terms

You can contract leases, as well, in both residential and commercial forms. Leases are contracts, contractual obligations, between landlords and tenants that set the terms upon which the parties share the property. Common residential lease terms (the assignment of contract rights) include the names of all the parties leasing the property, limits on occupancy, term of the tenancy, rent, deposits and fees, repairs and maintenance, entry to rental property, restrictions on tenant illegal activity and pet clauses. 4 Commercial lease terms can also include exclusive use, improvements, taxes, covenants, obligation to repair, transfer structure and personal exposure. 5

Key Considerations for Property Law in Contracts Avoiding Breach of Contract

Because property and contract law interweave, lawyers must be at the top of their game when examining sales and purchase agreements, leases, and land-use restrictions. Anything less could lead to contract disputes and potential breach of contract.

Legal Counsel and Contract Review Meeting Contractual Obligations

During the process of selling or buying a home, a real estate attorney works for the seller or the buyer, but not both. Some states even require parties to use an attorney. During real estate transactions, lawyers can draft and complete contracts, write amendments to standard contracts, complete title searches, and conduct closings. 6 Out of all of this, the lawyer’s most important function is to review the contract to ensure that the terms are favorable to the party they represent and that there are no surprises.

Due Diligence in Property Transactions To Avoid Contract Disputes

Legal due diligence is a process by which the contracting parties make certain that they have all the information and need no more documents. In property transactions, this means that they have the original deed and all the covenants and restrictions attached to it, including homeowners association agreements.

The due diligence period is the time between the signing and the closing when the purchaser’s team must verify that everything is right. This is the time for inspections, title checks, appraisals and surveys. 7 This is the time to lay out all the documents together and confirm that you have a full understanding of the home or building your client is purchasing.

Regulatory Compliance and Zoning Laws in Assignment of Contract Rights

The property will also have to comply with all zoning laws and other regulations that apply to the property based on its location. They may include these with the deed, or they may not. Zoning may affect a client’s plans if they want to run a business from home, add a mother-in-law suite to their garage or even park an RV in their driveway. 8

Elevate Your Legal Career With an Online Master of Studies in Law

The intricate dance between contract law and property law underscores the complexity of legal dealings in property transactions. As the backbone of many commercial and personal agreements, a thorough understanding of their interplay is essential for anyone involved in drafting, interpreting, or executing property-related contracts. For legal practitioners, investors, and business professionals alike, mastering this interplay is not just about preventing disputes—it’s about unlocking opportunities and facilitating seamless transactions in a legally compliant manner.

The evolving nature of both contract law and property law, driven by changes in technology, society, and the economy, means that the landscape is continually shifting. Staying abreast of these changes through dedicated study and professional growth is crucial for anyone looking to thrive in these intersecting realms of law.

If you are a professional looking to grow your understanding of the law, but not practice it as an attorney, consider the University of Pittsburgh School of Law’s Online Master of Studies in Law (MSL) program . Property and contracts are just two of the courses included in the core curriculum for the MSL program.

The Online MSL courses are completely asynchronous and taught by world-renowned Pitt Law faculty and industry experts. You will also go through the program with a cohort of like-minded professionals, which maximizes opportunities for collaboration, support, networking, and more. Set yourself apart as a leader when you choose to pair the core MSL curriculum with one of our in-demand specializations to learn what matters most to your career. Choose from Health Care Compliance , Human Resources Law , International Business Law , Corporate Compliance , and Sports, Entertainment, and Arts Law .

Schedule a call with an admissions outreach advisor to discuss how our Online MSL aligns with your goals and interests.

• Retrieved on March 11, 2024 from nar.realtor/magazine/real-estate-news/law-and-ethics/avoid-legal-snafus-around-canceled-contracts
• Retrieved on March 11, 2024 from rocketmortgage.com/learn/purchasing-a-deed-restricted-house
• Retrieved on March 11, 2024 from lincolninst.edu/publications/articles/easements-covenants-servitudes
• Retrieved on March 11, 2024 from americanbar.org/groups/public_education/resources/law_issues_for_consumers/everydaylaw0/real_estate/renting_a_home/lease_clauses/
• Retrieved on March 11, 2024 from businessnewsdaily.com/15101-commercial-lease-guide.html
• Retrieved on March 11, 2024 from rocketmortgage.com/learn/real-estate-attorney
• Retrieved on March 11, 2024 from nationwide.com/lc/resources/home/articles/real-estate-due-diligence-period
• Retrieved on March 11, 2024 from smallbiztrends.com/2023/05/home-business-zoning.html

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Assign is the act of transferring rights , property , or other benefits to another party (the assignee ) from the party who holds such benefits under contract (the assignor). This concept is used in both  contract  and property law . 

Contract Law  

Under contract law, when one party assigns a  contract , the assignment represents both: (1) an assignment of rights; and (2) a delegation of  duties . 

• For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C. 
• Here, A has both: (1) assigned A’s rights under the contract to the $50; and (2) delegated A’s  duty  to teach guitar, to C. 
• In this example, A is both the “assignor” and the “delegee” who delegates  the duties to another (C), C is known as the “ obligor ” who must perform the  obligations  to the  assignee , and B is the assignee who is owed duties and is liable to the obligor.

Assigning of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law. 

First, if an individual has not yet secured the contract to perform duties to another, they cannot assign their future right to an assignee. 

• That is, if A has not yet contracted with B to teach B guitar, A cannot assign their rights to C. 

Second, rights cannot be assigned when they  materially change the obligor’s duty and rights. 

Third, the obligor can sue the assignee directly if the assignee does not pay them. 

• Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor. It can only be delegated if the promised  performance  is more commonplace. Further, an obligee can sue if the  assignee  does not perform.  However, the delegee is  secondarily liable  unless there has been an  express   release  of the delegee. 

• Meaning if B does want C to teach guitar but C refuses to, then B can sue C. If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is  novation , which is when a new obligor substitutes and releases an old obligor.  If novation occurs, then the original obligor’s duties are wiped out. Novation requires an original obligee’s  consent . 

Property Law

Under  property law , assignment typically arises in landlord-tenant situations.

• For example, A might be renting from landlord B but wants another party (C) to take over the property. 
• In this scenario, A might choose between  assigning  and  subleasing  the property to C. 
• If  assigning , A would give C the entire balance of the term , with no reversion to anyone; whereas if  subleasing , A would give C the property for a limited period of the remaining term.
• Under assignment, C would have  privity  of  estate  with the landlord while under a sublease, C would not. 

[Last updated in June of 2022 by the Wex Definitions Team ]

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Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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How To Navigate The Real Estate Assignment Contract

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.

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.

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.

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Small estates: how does assignment of property work.

When a person dies, they are called a decedent. A decedent leaves property behind. That property needs to be passed on to those who will inherit it. If a person has a small estate, then a shortened process, called assignment of property, can be used instead of the probate administration process.

Read this article to learn about how to use the assignment of property process. You can use our Do-It-Yourself Settling a Small Estate  tool to create the forms you will need for this process. Read the article An Overview of Small Estate Processes to learn more about the other ways a small estate can be distributed.

What is In an Estate?

The property a decedent leaves behind that can be distributed through the assignment process could include:

• Real estate (houses and other buildings, land and the things attached to it)
• Personal property (furniture, cars, and other things not attached to land)
• Bank accounts and cash
• Stocks and bonds
• Debts owed to the person

Some of the property is not part of the estate, which means it cannot be distributed through the assignment process. The estate does not usually include:

• Jointly owned property,
• Insurance policies,
• Retirement accounts, or
• Trusts that are not established by a will

Jointly Owned Property

Jointly owned property is property owned by more than one person. It is generally not included in an estate. Examples of jointly owned personal property are if you and the decedent are both listed on the title of a car or if you have joint bank accounts. When the decedent died, you automatically have full ownership of that property, so it is not part of the estate. You may want to take a copy of the decedent’s death certificate to the bank or Secretary of State (SOS) to remove the decedent’s name from the account or car title.

However, sometimes joint ownership is more complex. If you own real property with the decedent, or if you own any type of property with the decedent and someone else, ownership can be hard to understand after a death. Read the article Jointly Owned Property  to learn more about this, or use the Guide to Legal Help to find a lawyer or legal services in your area.

Small Estates

In order to use the assignment process, a decedent’s estate must be small. Whether an estate is small depends on the value of the property in it. The dollar limit can change each year. If a person dies on or after February 21, 2024, an estate must be valued at $28,000 or less to be small. If a person died in 2023 through and including February 20, 2024 an estate must be valued at $27,000 or less. If a person died in 2022, an estate must be valued at $25,000 or less. If a person died in 2020 or 2021, an estate must be valued at $24,000 or less. If a person died in 2019 or 2018, an estate must be valued at $23,000 or less. 

Assignment of Property

Assignment of property is the small estate process you must use if the decedent had real property. However, even if there was no real property, you may choose to use assignment of property if an estate is small. This is the only small estate process where a Probate Judge reviews and approves the division of property.

To use this process, you must know all the property and the heirs the decedent had, and have information about the funeral or burial expenses. You must also be an heir or the person who paid the funeral bill.

You must list all real property and personal property with the value of each. You can estimate real property’s market value by doubling its State Equalized Value (SEV). You can find the SEV on property tax bills or assessments for the property. You can also find it on most county or municipality websites.

The value of the property in the estate is its market value. Any liens or loans on property will not be deducted when determining if the estate falls into the small estates amount. There is a separate calculation to determine the fees that the court will charge to file the petition. This is called the inventory fee. You are allowed to deduct the value of the mortgage or other liens on real property when you determine the inventory value. You are not allowed to make any deductions from the value of personal property. 

To estimate the value of personal property, think about how much you would ask for it at a yard sale or if you were selling it online.

Who Will Inherit?

After funeral and burial expenses have been paid, the court will order any remaining property to be divided among the heirs. The inheritance formula determines which heirs inherit property, and how much of the property each person will get. If there is a surviving spouse, that person inherits all the property.

If there is no surviving spouse, any property will be given or paid to direct descendants of the decedent, starting with the decedent’s children. If all of the decedent’s children are still alive, they will split the property equally. If a child died before the decedent, that person’s children will split the share equally. If the decedent had a grandchild who should inherit, but they died before the decedent, the grandchild's children will split the shares equally. If inheriting children or grandchildren die before the decedent with no living children of their own, the line of inheritance stops there. Their share will be divided between the remaining descendants.

If there are no living descendants of the decedent, the property will be split between the decedent’s parents equally. If only one parent is still living, that parent inherits all the property. If both parents died before the decedent, the property will go to their descendants, starting with the decedent’s siblings. The same rules of representation mentioned above apply.

If an inheriting sibling died before the decedent, that person’s child(ren) will split their share of the property equally. The same is true if an inheriting niece or nephew died before the decedent. If inheriting siblings, nieces, or nephews die before the decedent with no living children of their own, the line of inheritance stops there. Their share will be divided between the remaining heirs.

If no descendants of the decedent’s parents are living, the property is divided among the decedent’s grandparents. Half of the property will go to the decedent’s paternal grandparents, and the other half will go to the maternal grandparents. If only one maternal or paternal grandparent is living, they will take the full half of the property. If both grandparents on one side died before the decedent, their half of the property goes to their descendants, starting with the decedent’s aunts and uncles. The same rules of representation mentioned above apply.

If an inheriting aunt or uncle died before the decedent did, that person’s children will split the share of the property equally. The same is true if an inheriting cousin died before the decedent. If inheriting aunts, uncles, or cousins die before the decedent with no living children of their own, the line of inheritance stops there. Their share will be divided between the remaining heirs.

There are other rules too, including special rules if an heir dies after the decedent does. You can use our Do-It-Yourself Settling a Small Estate tool to help you figure out who will inherit and what share each heir will receive. You may also want to talk to a lawyer if you have questions about this. You can use the Guide to Legal Help to find legal services in your area.

Survivorship and the 120-Hour Rule

Survivorship affects inheritance rights of heirs and devisees. In Michigan, a person must live more than 120 hours after a decedent dies for that person’s survivorship rights to take effect. Generally, anyone who dies during the first 120 hours after a decedent’s death is considered to have predeceased (died before) the decedent and they lose their interest in the decedent’s property. The 120-hour rule is not followed if:

• A will, deed, title, or trust addresses simultaneous deaths or deaths in a common disaster;
• A will, deed, title, or trust states a person is not required to survive for a certain amount of time or it specifies a different survival period;
• The rule would affect interests protected by Michigan law; or
• The rule would cause a failure or duplication in distributing property.

Notice to Decedent’s Creditors

This process does not include any notice to creditors . If a creditor tries to collect a debt within 63 days of when the order is issued by the court, the person who got the property will have to pay the debt, up to the amount or value of the property the person got. This does not apply if the decedent’s spouse or minor children got the property. For example, if the decedent’s brother got $1,000, a creditor the decedent owed $500 could get the $500 from him. If the decedent had owed the creditor $1,500, the brother wouldn’t have to pay more than $1,000 to the creditor. If the decedent’s spouse or minor child got the property, they would not have to pay the creditor anything.

The Process

To start this process, file a Petition for Assignment with the probate court in the county where the decedent lived. If the decedent lived outside Michigan, file the Petition for Assignment in the county where the decedent had real property. You can use our Do-It-Yourself Settling a Small Estate tool to create this petition.

After you complete the form, print two copies. Date and sign both copies. The Do-It-Yourself Settling a Small Estate  tool will prepare a Testimony to Identify Heirs, but not all courts require it. Not all courts require a certified copy of the death certificate. You might want to check the probate court’s website or call and ask before you go to court to file the documents. You can find contact information for the court on the right side of this page if you have selected a county.

You will need to file the following documents with the probate court:

• Both copies of the petition
• The Testimony to Identify Heirs (if your court requires it)
• A copy of the death certificate
• Proof that the funeral and burial expenses have been paid or a bill showing the amount owed

There is a $25 filing fee. There is also an inventory fee. It is based on the value of property in the estate. If the property in the estate has no value, the inventory fee is $5. For example, if the decedent had a house that was worth less than the amount of the mortgage, the value of the estate could be zero. You can use the  inventory fee calculator  on the Michigan One Court of Justice website to see how much the inventory fee will be.

The petition is reviewed by a probate court judge. If everything is correct when you file the Petition and Order, the judge will sign it. You may be able to get your certified copy of the Order Assigning Assets on the day you file it. You need the Order Assigning Assets to distribute the property in the estate.

There is a fee to get a certified copy of the Order Assigning Assets. The fee to get a certified copy varies, but it is usually $15 to $20. You need a certified copy of the order to transfer the property in the estate. You may want to get more than one certified copy when you file the petition. Some courts charge less for extra certified copies if you get them at the same time.

The court will order the funeral and burial expenses be paid or reimbursed to whoever paid them. This means all paid and unpaid funeral expenses will be deducted from the value of the estate when determining if it is a small estate. If there is no cash available, something may have to be sold to pay those expenses.

Distributing the Property

Once the judge has signed the Order Assigning Assets, you will be able to distribute the property in the estate to the heirs. The Do-It-Yourself Settling a Small Estate  tool will tell you the shares each person is entitled to, but some things (like cars) cannot easily be divided. Decide how to divide the existing property so everyone gets the share they deserve.

Transferring Money from Bank or Credit Union Accounts

If the decedent had bank or credit union accounts that were not jointly owned with another person, take the certified copy of the order to the bank to close the account. The bank should release the money to the heir or heirs by writing a check or money order.

Transferring a Vehicle

If the decedent had a vehicle, the surviving spouse or heir must complete a Certification from the Heir to a Vehicle . If you use our Do-It-Yourself Settling a Small Estate  tool, you will get a completed certification form for each vehicle you are transferring.

Take it to the Office of the SOS with a copy of the death certificate. If you have a copy of the vehicle title, take that, too.

Transferring Real Property

If the decedent had real property, you will need to record a certified copy of the order to transfer the property. Take the order to the register of deeds for the county where the property is. Check the county’s website or call the local register of deeds office to find out how much the filing fee is.

You should not have to pay a transfer tax. Transfer tax is based on how much is paid for the property. Nothing was paid for this property when it transferred because the decedent died.

When the property is transferred, its value may “uncap.” The amount property tax can increase in a year is limited while the property is owned by the same person. When the property is transferred to another person, the property tax will be adjusted to the property’s current market value. You can learn more about property taxes on the State of Michigan’s Treasury Department website .

If the property was the decedent’s principal residence, it probably had a Homestead Tax Exemption attached to it. Under Michigan law, if you own your home you do not have to pay certain taxes on it.

If the person inheriting the property will be living there, they need to fill out a Principal Residence Exemption Affidavit . If whoever is getting the property is not going to live there but plans to continue owning it, they need to fill out a Request to Rescind a Principal Residence Exemption .

One of these forms must be filed with the city or township where the property is located within 90 days after the decedent’s death. If it is not filed, additional taxes and fees will be charged.

You may not have to file the Request to Rescind a Principal Residence Exemption for up to three years if the property is listed for sale during that time. If you are selling real estate in this situation, you may want to talk to a real estate agent or a lawyer. 

If you have a low income, you may qualify for free legal services. Whether you have a low income or not, you can use the Guide to Legal Help to find lawyers in your area. If you are not able to get free legal services but can’t afford high legal fees, consider hiring a lawyer for part of your case instead of the whole thing. This is called limited scope representation. To learn more, read Limited Scope Representation (LSR): A More Affordable Way to Hire a Lawyer . To find a limited scope lawyer, follow this link to the State Bar of Michigan lawyer directory . This link lists lawyers who offer limited scope representation. You can narrow the results to lawyers in your area by typing in your county, city, or zip code at the top of the page. You can also narrow the results by topic by entering the kind of lawyer you need (divorce, estate, etc.) at the top of the page.

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