Introduction: The Power of Contract Assignments
In real estate investing, contract assignments are a powerful tool. They allow investors—especially wholesalers—to secure a deal and then pass it on to another buyer for a profit. But before you go flipping contracts left and right, you need to know one thing: When can you actually assign a contract?
Many investors get caught in legal gray areas, confused by the fine print of their contracts. Some contracts can be freely assigned, while others have restrictions that could leave you scrambling for a backup plan.
So, let’s break it down: When can you assign a contract, and what should you watch out for?
1. Default Rule: Contracts Are Assignable Unless Stated Otherwise
What Does the Law Say?
In most states—including Florida—the default rule is that contracts are assignable unless:
✔ The contract specifically prohibits assignment (e.g., “This contract may not be assigned without seller consent.”)
✔ The contract involves personal services that require a specific party to perform (like an artist painting a mural or a doctor performing surgery—neither of which can be assigned).
What This Means for Real Estate
If a contract does NOT mention anything about assignment, you are legally allowed to assign it. However, just because you can assign a contract doesn’t always mean you should—some deals require strategy and smooth handling.
2. When You Can Assign a Real Estate Contract
If the contract is silent on assignment, you can move forward with assigning it. Here’s when assignment is typically allowed:
✅ a) The Contract Has an Assignment Clause
Many real estate contracts already include language allowing assignment. Some even state that no seller consent is required, making things smooth for wholesalers and investors.
A strong assignment-friendly clause might look like this:
“Buyer may assign this contract to any party without further consent from the Seller.”
If this is in your contract, you’re golden. Assign away!
✅ b) The Contract Does Not Prohibit Assignment
If the contract doesn’t explicitly say anything about assignment, it’s generally assumed that you can assign it.
However, some sellers don’t like surprises. Even though you don’t have to notify them in most cases, transparency can keep deals running smoothly.
✅ c) The Seller Agrees to the Assignment
Some contracts prohibit assignment unless the seller gives permission. If you’re in this situation, all you need to do is ask the seller for consent—and if they agree, you’re good to go.
💡 Tip: When asking for consent, frame it as a benefit to the seller:
“This allows us to close quickly while still ensuring you get your full asking price.”
A little persuasion goes a long way.
3. When You CANNOT Assign a Contract
There are situations where assignment is not possible (or at least very difficult). Let’s look at them:
❌ a) The Contract Specifically Prohibits Assignment
If the contract clearly states that it cannot be assigned, you’re stuck. This is common in:
- New construction home contracts (builders often forbid assignments).
- Bank-owned properties (REOs) (banks typically require the original buyer to close).
- Government-backed properties (HUD, VA, etc. often prohibit assignments).
🛑 Solution: If you can’t assign, consider a double closing (buying and reselling the same day) or using an LLC that you can sell to the new buyer.
❌ b) The Contract Has a “No Assign” Clause But You Try to Assign Anyway
Ignoring an anti-assignment clause can land you in legal trouble. Sellers can refuse to close, and in worst cases, you could even be sued.
If you’re working with a contract that prohibits assignment, DO NOT assume you can get around it. Instead, negotiate upfront or use alternative strategies (like a double close).
❌ c) The Assignment Creates a Higher Risk for the Seller
Some contracts may not explicitly forbid assignment, but if assigning it dramatically changes the risk to the seller, they could push back.
For example:
- If the new buyer has financing issues, the seller might worry about delays.
- If the new buyer has different contract terms, the seller might reject the deal.
💡 Solution: Always ensure your end buyer is solid and ready to close. The last thing you want is an upset seller backing out of the deal.
4. Best Practices for Assigning Contracts Smoothly
Now that you know when you can (and can’t) assign contracts, let’s talk strategy. Here are some best practices to keep your deals smooth and successful:
🔹 a) Use Assignment-Friendly Language in Your Contracts
Whenever possible, negotiate upfront to allow assignments. This makes your deals flexible and avoids legal headaches later.
🔹 b) Be Transparent (When Necessary)
While you’re not always legally required to tell the seller, transparency helps—especially with sellers who might be skeptical.
💡 Example: Instead of saying, “I’m assigning this contract to another buyer,” try:
“I work with multiple investors, and I may bring in a partner to close quickly.”
This keeps things honest but simple—without overcomplicating the deal.
🔹 c) Choose an Investor-Friendly Title Company
Not all title companies handle assignments smoothly. Make sure your title company understands wholesaling and can process assignments without delays.
🔹 d) Know Your End Buyer
Before you assign a contract, make sure your end buyer is ready to close. If they back out, you might get stuck scrambling for another buyer—or worse, lose the deal.
5. Alternative Strategies If You Can’t Assign
If you cannot assign the contract, don’t panic! There are still ways to structure your deal:
🔸 Double Closing – Buy the property in your name and resell it immediately to your end buyer.
🔸 Use an LLC – Buy the property in an LLC and sell the LLC to your buyer.
🔸 Close and Resell Later – If you have funds, close and flip it properly.
Each method has different costs and risks, but they can work when assignments aren’t possible.
Final Thoughts: When Can You Assign a Contract?
✅ If the contract allows assignment or is silent on the issue, you can assign it.
❌ If the contract prohibits assignment, you CANNOT assign it (unless the seller agrees).
Smart investors always check their contracts, negotiate assignability upfront, and use clear communication to keep deals running smoothly.
Want to learn more about making real estate deals work for you? Let me teach you how at propertyprofitacademy.com!
