Standard Real Estate Purchase And Sale Agreement With Assignment Clause
Buying or selling a property is typically one of the most significant financial transactions you will ever make. For this reason, it is essential to have a comprehensive agreement that outlines the terms and conditions of the sale. A standard real estate purchase and sale agreement with an assignment clause is a legal document that can protect both the buyer and seller in a real estate transaction.
What is a Standard Real Estate Purchase and Sale Agreement?
A standard real estate purchase and sale agreement is a legally binding contract between the buyer and seller of a property. The agreement outlines the terms and conditions of the sale, including the purchase price, deposit, closing date, and any contingencies. Contingencies are conditions that must be met before the sale can be finalized, such as a satisfactory home inspection or the buyer obtaining financing.
What is an Assignment Clause?
An assignment clause is a provision in a real estate contract that allows the buyer to transfer their rights and obligations under the agreement to a third party. This can be useful if the buyer is unable or unwilling to complete the purchase themselves, and wants to assign the contract to another party.
How Does an Assignment Clause Work?
When a buyer includes an assignment clause in a real estate purchase and sale agreement, they have the right to assign the contract to another party. The buyer must provide written notice to the seller of their intention to assign the agreement, and the assignee must agree to assume all of the buyer's obligations under the agreement. Once the assignment is complete, the assignee is responsible for completing the purchase of the property.
Why Include an Assignment Clause?
There are several reasons why a buyer may want to include an assignment clause in a real estate purchase and sale agreement. One reason is that it allows them to enter into a contract to purchase a property without having to complete the purchase themselves. This can be useful for real estate investors who want to lock in a property at a certain price, but do not yet have the financing in place to complete the purchase themselves.
Another reason to include an assignment clause is that it allows the buyer to sell the property before they take ownership. This can be useful for buyers who are purchasing a property with the intention of flipping it for a profit. By assigning the contract to a third party, they can sell the property before they take ownership and avoid having to pay closing costs or hold the property for an extended period.
What Are the Risks of Including an Assignment Clause?
There are some risks associated with including an assignment clause in a real estate purchase and sale agreement. One risk is that the seller may not agree to the assignment. If the seller does not agree to the assignment, the buyer may be unable to complete the purchase themselves and may lose their deposit.
Another risk is that the assignee may not be able or willing to complete the purchase. If the assignee is unable to complete the purchase, the buyer may be held responsible for completing the purchase themselves or may lose their deposit.
Conclusion
A standard real estate purchase and sale agreement with an assignment clause can be a useful tool for buyers and sellers in a real estate transaction. It can provide flexibility for the buyer and allow them to enter into a contract to purchase a property without having to complete the purchase themselves. However, there are risks associated with including an assignment clause, and it is essential to consider these risks before including one in a real estate purchase and sale agreement.