Our team of specialist property solicitors are experienced in assignments and have been involved in many assignment transactions with clients in the UK and overseas, including Hong Kong, Malaysia and China.
Simply put, an assignment is the transfer of a contract to purchase a pre-construction property, where the contract has already been exchanged.
The seller is selling their contract before they have taken possession of the property.
The seller is not selling the property, but their contract and their promise to purchase the property, along with the rights and obligations of their agreement of purchase and sale contract.
The Seller (who was the original purchaser) is known as the Assignor; the new Buyer is the Assignee. The Assignee is the one who will complete the final sale with the developer.
As an original purchaser, you can only assign your contract if there is a clause in your contract that permits you to do so. There is usually an assignment agreement clause which stipulates the right to assign the contract to another under certain conditions. Mainly, this permits the original purchaser, or the Assignor, to sell their obligation to purchase the property to another individual, or the Assignee. The Assignee is then the one to complete and sale with the developer. Often these clauses also require the developer’s consent and a fee to be paid. On occasion the clause will prevent an assignment taking place either before or after certain events (eg, two months prior to the build being finished or no assignments prior to all deposit funds being paid).
If you are an original purchaser looking to assign your contract, please contact us on 01483 451900 or do an online enquiry.
Points to note regarding Assignment Sales:
- The Assignor is not selling the property, they are selling their right to acquire the property from the developer.
- The Assignor assigns their interest and rights in the original agreement with the developer.
- The Assignor assigns to the Assignee its interest in the original deposit.
Once the agreement/contract has been assigned to the Assignee, the Assignor is no longer party to the transaction.
How do I find a buyer?
There may be conditions in your Agreement of Purchase & Sale which prevents you from advertising an assignment. However, there are estate agents who specialise in assignment sales and have details of potential buyers looking for assignments.
The developers themselves may also have a list of people who may be interested in an assignment.
What are the pros and cons of assignment compared to resale?
Pros of Assigning vs. Waiting
- You can hopefully get your deposit back and lock in a profit sooner
- You avoid paying SDLT
- You can Maximise your return if prices are declining and you expect them to continue to decline
Cons of Assigning vs Waiting
- The pool of Buyers for assignment sales is much smaller than the pool of Buyers for resale properties, which could result in the sale taking a long time, getting a lower price than you would if you waited, or both.
- Lots of mortgage lenders refuse to lend to assignee purchasers and the lender market is therefore much smaller
- Marketing restrictions could reduce the chances of finding a Buyer
- Assignment sales can be complicated and slightly more expensive, so you want to make sure that you’re working with a property solicitor who is experienced with assignment sales.
If you have any queries regarding assignments, please contact our residential property lawyers, based in Guildford, on 01483 451900 or alternatively make an online enquiry here and we will contact you.