Here’s How an Assignable Purchase Agreement Can Help You
Whether you have dealt with legal documents in the past or not, you may be unfamiliar with an assignable purchase agreement.
Assignable contracts are a little specific, so if you don’t have experience in writing or signing them, you may have an urge to spend your savings on an expensive lawyer.
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This article will answer all your questions regarding assignable purchase agreements and show you how to write contracts on your own.
What Does an Assignable Purchase Agreement Entail?
An assignable purchase agreement is a purchase agreement with the clause that the rights and obligations stated in the contract can be transferred to another party. This transfer is called the assignment of contract.
The party that wants to sell their right to purchase a property or underlying assets is called the assignor or the transferring party, while the other party is the assignee.
The assignee will benefit from acquiring assets or property of the original purchase agreement before its expiration date, but they also must undertake all the duties of the assignor.
Is Your Agreement Assignable?
If you’re interested in assigning your contract to another party, you must first check whether your contract is assignable.
Regardless of what kind of a purchase agreement you originally signed, you will find a clause or a statement in it that states whether you can transfer your rights and obligations to someone else. The clause should be located toward the end of the agreement. If your agreement includes an assignment provision, you can begin the assignment of the contract process.
If you can’t find this clause, read your entire purchase agreement carefully. You have to stumble upon a sentence that states either that the contract ‘may not be assigned’ or that it may.
If you’re the buyer of the real estate purchase agreement, you can assign the contract to another party if there is a phrase “and/or assigns” next to your name on the first page of the contract.
Who Uses Assignable Purchase Agreements?
An assignment of contract is typical in:
- Real estate sale and purchase—If there is a phrase ‘and/or assigns” next to the buyer name, the real estate purchase agreement is assignable. Assigning the right to purchase property is particularly common when using for sale by owner contracts
- Futures market—Futures market involves the sale and purchase of a commodity or underlying assets. The parties in the futures contract are obliged to either buy or sell the commodity until the expiration date. When they can’t do that, they often choose to assign the contract to another party. The assignee takes over that responsibility but also benefits from the sale or purchase of underlying assets
How To Assign Your Contract Properly
Here are the essential steps you have to take when assigning your contract to another party:
- Review your original purchase agreement—Check whether there is an anti-assignment clause in your contract
- Notify the other party of the original purchase agreement of your plans—Make sure to inform the non-transferring party of the purchase contract you will be transferring your rights and responsibilities to another party even if the agreement is assignable. If consent from the non-transferring party is mandatory, and you perform the assignment of the contract without it, you will be breaching the original agreement
- Enter into the assignment of contract—Negotiate the terms with the assignee and draft the assignment of contract to complete the transfer
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