Blog by Sam Wyatt Personal Real Estate Corporation

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How Assignments' of Contracts Work

Here's a little primer on Assignments:

Assignments involve a few basic figures:

New Price (Assignee's Total Purchase Price)
Assignment Amount (Difference between Original contract price and New Price)
Deposit Held by Developer
Original contract price
Assignment deposit: typically 5% of the New Price

NB: Original Contract Price + Assignment Price = New Price OR
New Price - Assignment Price = Contract Price.

Assignment costs are typically negotiated to be paid in three basic ways:

1. Assignee repays Deposit Held by Developer (to Assignor) and Assignment Amount (to Assignor)immediately and pays the original contract price to the developer at closing.

2. Assignee repays Deposit Held by Developer and a deposit on the Assignment Contract immediately. Assignee then pays the Assignment Amount (to the assignor) Plus contract price (to the developer) at closing.

3. Assignee repays Deposit Held by Developer, and a PORTION of the Assignment Amount immediately. Assignee then pays the remainder of the Assignment Amount (to the assignor) plus contract price (to the developer) at closing.

Obviously the Assignor would like Option #1 best and the Assignee generally would prefer Option #2 best.

I will post a more exhaustive "how-to" soon.

 

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