New Build & Off Plan Purchases – Assigning Contracts – what to do if you no longer want to proceed with an exchanged contract.

August 15, 2023

This short article will focus on the assignment of property contracts in New Build or Off Plan purchases, but some of this information does apply to contract law as well.

What is an Assignment?

To put it simply, this is the process in which you transfer the contract from your name into someone else’s name, and in turn transferring the agreements rights, property, and obligations.

The reason people assign contracts is because once exchanged, they are bound to the contract agreement and must fulfil it. Assigning a contract could potentially unbind them.

The parties to an assignment are, the Seller of the property (the Developer or Builder) , the Assignor (the person who has exchanged/original buyer) and the Assignee (the person to who the assignor is transferring to).

Reasons to Assign and what to consider?

Firstly, one reason to assign is that the property has since gone up in value since exchange and you are able to make an early profit without completing, some cases you may no longer be in a position to complete your purchase as you can no longer afford the property or that the mortgage rates are higher than expected which impacts your ability to fund the purchase. However, not all contracts will have a clause in them giving you the ability to assign, so it is important to know what you are entering into before you sign the document.

Also, in some cases, the Developer may only allow assignment with the reassurance that, if the assignee fails to complete after the assignment of the contract, the assignor is still under the agreement, meaning they will still have to perform the contract, even after they have tried to assign, in essence the Developer would keep the original buyer ‘on the hook’. The assignor and Assignee must consider the possibility of this in their agreement.

Where there is no option to assign. some Developers may let you rescind the contract but will keep the deposit, therefore you will be losing out on any deposit monies therefore it is important for the Assignor to consider their options before exchanging and the Assignee to understand the contract beforehand before they complete the assignment, as they will be bound by that agreement.

If you want to know more about the assignment of contracts, contact us at 0121 705 7571 or enquiries@wallacerobinson.co.uk

References

https://uk.practicallaw.thomsonreuters.com/7-381-7509?originationContext=document&transitionType=DocumentItem&contextData=(sc.Default)&ppcid=2d2498e71c954b8fba8f90a2fe968f47&comp=pluk&OWSessionId=2498aa04275c4ccf9c707bd209070907&skipAnonymous=true&firstPage=true

https://www.lawbite.co.uk/resources/blog/what-is-assignment-in-contract-law

Oliver Wheldon
Paralegal – Development Department

This article is for general information purposes only. It does not constitute technical, financial, legal advice or any other type of professional advice and is no substitute for specific advice based on your individual circumstances. We do not accept responsibility or liability for any actions taken based on the information in this article. For more information, please click here.