Assignment
Definition and meaning of Assignment in real estate.
An assignment is the transfer of a party's rights, interests, or obligations under an existing contract to another party.
In more detail
In real estate, this process allows a buyer, known as the assignor, to pass their purchase agreement to a new buyer, known as the assignee, before the transaction closes. This technique is frequently used by real estate investors to secure a property under contract and then sell the contract rights to another investor for a fee.
The original buyer remains legally responsible for the contract obligations if the new buyer fails to perform, unless the seller signs a release of liability. Most purchase contracts contain clauses that either permit, restrict, or outright prohibit assignment, meaning the seller must typically consent to the transfer.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Also known as | Contract assignment |
| Party transferring rights | Assignor |
| Party receiving rights | Assignee |
An investor signs a contract to purchase a house for a set price, but before closing, she assigns the purchase contract to a local builder for a fee, leaving the builder to complete the purchase.
Frequently asked questions
Does a contract assignment release the original buyer from liability?
No, the original buyer generally remains liable if the assignee fails to close, unless the seller explicitly agrees to release the assignor from the contract.
Can any real estate contract be assigned?
Most contracts can be assigned unless the agreement contains specific language that prohibits assignment or requires the seller's prior written consent.
Related terms
Sources & references
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