I need to preface what I am about to say about assigning real estate contracts and real estate contract law in AZ with ‘ I AM NOT AN ATTORNEY . That said, I have practical experience in such matters which I will share. However, I need to be clear, if you are thinking of assigning a real estate contract or buying a real estate contract in AZ, please call a real estate attorney.
Before attempting to assign a contract, you will want to make sure it’s legal. If the contract says nothing about assignment, it’s legal to assign it. Contract rights are property under state law and can be assigned, or bought and sold, just like any other property.
A client of mine is in contract for a home in North Scottsdale; he loves the home and is several weeks from closing escrow. I received a telephone call yesterday from a real estate agent in Scottsdale inquiring whether my buyer would sell the contract to this Realtor’s buyer. Apparently, the agent had called the listing agent and asked for the buyer real estate broker, me. the agent asked if my client would consider selling the rights to the contract to his buyer.
There are some intricacies of real estate agency disclosure, ethics and confidentiality that I will not get into at length here; however, please know that I am not permitted to discuss the price and terms of the contract. This fact makes it extremely difficult to assign contracts, but not impossible. The reason it is so difficult is that if the new buyer pays the current contract holder a fee for the rights that contract, the buyer must perform on the current terms. Therefore, it would be critical that the new buyer knows the terms. In this case, my only recourse is to introduce the new buyer with my buyer. Because, my buyer can tell anybody he feels he would like to about the terms the contract.
After full disclosure, and after the new buyer has received a copy of the contract in terms from the current buyer, to attorneys should get together and work out a detailed agreement of how this contract will be assigned to the new buyer. Please note, assigning contracts are 100% legal, UNLESS, language is specifically written that says contracts are not assignable. If you are working with investors, I do recommend that as a seller you include this language in your contracts if you want to prevent this as it does happen with good investments.
Please note that if you receive a flat fee and assign the contract you are assigning all of the assets, liabilities, benefits and privileges to that contract. I always recommend that prior to assignment, you approach the seller to get their cooperation, possibly even extending certain terms and conditions in writing to the new buyer. If you do not get their cooperation, you still are legally permitted to go forward and assign your rights. But remember, the down side of assigning a contract is that you may remain responsible for the performance of the contract, if the person to whom you’re assigning the contract (called the “assignee”) breaches the contract.
Please speak with a lawyer who understands what your liabilities are in terms of a potential ‘breach’.
If you have questions about real estate in Scottsdale or Phoenix real estate investments, please email me at firstname.lastname@example.org
James Wexler ~ Associate Broker ~ Real Estate investments in Scottsdale ~ 480-221-8080