Assignment of contract

An assignment of contract is the transfer of a buyer's rights under a purchase agreement to another buyer. In wholesaling, the investor signs a contract with the owner, then assigns it to an end buyer for an assignment fee. The end buyer closes with the seller directly and takes title; the wholesaler never owns the property.

The purchase agreement must allow assignment. Many investor contracts add "and/or assigns" after the buyer's name for this reason, while bank-owned and short sale contracts often restrict it. The assignment fee often shows up in the closing paperwork, so assume the seller may see it. Several states now regulate wholesale assignments with disclosure, cancellation or licensing rules, and those rules have changed often in recent years. Be upfront with the seller that you may assign. Rules vary by state; confirm with a local real estate attorney before you assign a contract.