Under paragraph 26 of the standard Residential Contract of Sale, the Purchaser may not assign the Contract without Seller’s consent. This clause gives rise to several questions: What is an assignment and why would a Purchaser want to assign? Would a clause in a Rider to the Contract trump paragraph 26 of the contract?
An assignment is a transfer of the Purchaser’s rights and obligations under the contract. A Purchaser may wish to assign their rights under a contract for many reasons. The Purchaser may wish to form a trust for estate planning purposes and have the trust take title. The Purchaser may wish to enter into a partnership with another individual and have a business entity or partnership take title. There could be many legitimate reasons to assign the Purchaser’s rights under the contract.
Often times, the Purchaser’s attorney will add a rider to the contract that allows the Purchaser to assign its rights under the contract under certain circumstances. For example, the Purchaser may wish to retain the right to assign the contract into a trust or business entity owned solely by the Purchaser or a member of Purchaser’s immediate family. That Rider will typically state that to the extent that the terms of the Rider conflict with the Contract, the Rider controls.
*Thank you for taking the time to read this article. This article is part of our “From Contract to Closing; Demystifying NY Residential Real Estate” Series. Other aspects of residential real estate transactions in New York are discussed in other Parts of this series.
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