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If you know anything about real estate contracts, then you know that there are different types. For example, the contract to purchase a property is not the same as the contract of sale.
The assignment is an entirely different animal. Real estate investors who wholesale properties will often use assignment clauses in their contracts because it's much easier to sell someone else their contract than sell them your whole property.
How does this work? Assigning your contract is just like signing another copy of it—you're transferring its benefits and burdens to someone else.
This can be done by filling out certain forms or just saying, "I'm assigning my contract to you." If you do the latter, make sure everyone signs it (including whoever gets assigned), and all the assignees and the assignor initial where appropriate.
The most important thing is to make sure that everyone fully understands assignment contracts because you're transferring a legal contract from one party to another. That means that there are risks involved with not having everything set up correctly. If your contract falls through for some reason, someone else could be stuck performing the terms of a failed real estate deal. Make sure everyone's clear on what they're getting into before moving forward, so no one gets burned later on. Clear as mud?
-Who is going to receive the benefits and burdens of your contract?
-Who is going to pay taxes as if it were their income?
-What type of documentation is required from the assignee or assignor?
-When does a contract become binding, and at what point can you request a release?
-Is there a fee for an assignment? If so, who pays it?
-Will the new party, need to fill out any additional paperwork upon signing the contract?
Most people use standard real estate contracts as assigned. The only difference occurs with property management contracts because those documents often include specific language regarding assignments. For example, read your contract carefully if you want to sell your house but still retain some ability to control its future by having some say in who buys it. Some forms allow for this feature, and others don't. If you're unsure, ask your agent to explain the terms of the contract before signing it.
The assignment is an entirely different animal. Real estate investors who wholesale properties will often use assignment clauses in their contracts because it's much easier to sell someone else their contract than sell them your whole property.
How does this work? Assigning your contract is just like signing another copy of it—you're transferring its benefits and burdens to someone else.
This can be done by filling out certain forms or just saying, "I'm assigning my contract to you." If you do the latter, make sure everyone signs it (including whoever gets assigned), and all the assignees and the assignor initial where appropriate.
The most important thing is to make sure that everyone fully understands assignment contracts because you're transferring a legal contract from one party to another. That means that there are risks involved with not having everything set up correctly. If your contract falls through for some reason, someone else could be stuck performing the terms of a failed real estate deal. Make sure everyone's clear on what they're getting into before moving forward, so no one gets burned later on. Clear as mud?
Here's a quick list of what you need for an assignment:
-Who is going to receive the benefits and burdens of your contract?
-Who is going to pay taxes as if it were their income?
-What type of documentation is required from the assignee or assignor?
-When does a contract become binding, and at what point can you request a release?
-Is there a fee for an assignment? If so, who pays it?
-Will the new party, need to fill out any additional paperwork upon signing the contract?
Most people use standard real estate contracts as assigned. The only difference occurs with property management contracts because those documents often include specific language regarding assignments. For example, read your contract carefully if you want to sell your house but still retain some ability to control its future by having some say in who buys it. Some forms allow for this feature, and others don't. If you're unsure, ask your agent to explain the terms of the contract before signing it.
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