Any interest in land whether present or future estate can be assigned including purchase agreements drafted and signed as part of the traditional sale process. An experienced agent can sniff out a bogus purchase agreement where the buyer seeks to tie up a property and then change the terms of the deal after the fact.
One of the biggest clues you may get in terms of having a buyer assign a purchase agreement is the insistence that the transaction is all cash and quick close, but the buyer doesn’t provide any legitimate proof of funds or any earnest money. A true quick close, all cash buyer who seeks the property without a contingency stands head and shoulders above a cash offer which morphs into a hard money load from a car finance guy. I had a 100% cash offer morph into financing, and the pre-approval provided was from a convicted mortgage fraudster—which is why it is so important to check and double check all the claims made by someone who states a transaction is all cash, or that they are able to secure financing.
The end result of jumping the gun by signing an all cash offer is that the property is all tied up. I have seen purchase agreements get assigned from builder to agent to newly formed LLC in a matter of days, with little asset verification—it can really spell trouble for a seller to sell to a buyer who has questionable ethics.
On the other hand assignment does have a legitimate purpose if one is a buyer—a large commercial transaction perhaps should stand on it’s own and have the business entity lease the property creating two going concerns that have cash flow. Assignment also can work when a buyer has acquire a purchase agreement on a property that is under it’s market value—which is great for the buyer and bad for the seller.
When in doubt, a non-assignment clause in a purchase agreement can prevent unscrupulous buyers from abusing this ability to transfer the future interest in the property. A sizeable down payment that is non-refundable is also advisable as a seller, as is triple verification of funds—making sure that claims made by a buyer whether for cash or mortgage are accurate.
Judgements can also come into play with the assignment of real estate contracts, so it’s very important to understand the balance sheet of a potential buyer or assignee. Consulting your attorney and Realtor throughout these processes is highly recommended.
As always, if you have a question about real estate, whether buying, selling, or something else, feel free to give me a call at (952) 473-1000.