Contract Assignment Clause: Everything You Need to Know
A contract assignment clause is one of the most important terms when creating a contract with a seller.3 min read
A contract assignment clause is one of the most important terms when creating a contract with a seller. In real estate, it can mean two different kinds of clauses depending on who is drafting the contract:
- It could be a clause saying the assignor has no representations or warranties about the agreement or property, and that the assignee agrees to the assignment after independently investigating the property and agreement.
- It could be a clause saying the assignee will not hold the assignor at fault. Furthermore, it could protect the assignor from any claims, costs, liabilities, damages, or other expenses associated with the agreement after the date it becomes effective.
What Should an Assignment Agreement Look Like?
There are a few other important aspects you should always include in an assignment agreement. First of all, you always need to mention and describe the property being talked about in the contract.
You'll want to include an acceptance provision. While these can vary, consider the following example:
- Investor, known as the assignee, will accept the aforementioned and foregoing Assignment of Contract dated Month, Day, Year by the assignor, and the seller and admits to undertake all the responsibilities and burdens of the assignor under the Contract.
You will need to include language in the contract that deals with earnest money. For example, a provision that states the assignee will reimburse the assignor for any money paid upfront is always a good idea. Having the assignee breach the agreement would mean the assignor will lose earnest money.
Also, use the agreement to describe when you should receive your assignment fee. You should avoid having your fee paid out of the escrow because most lenders won't let this transaction go through. However, if the assignee is reluctant to pay your fee as soon as the agreement is accepted, then escrow might be a better option.