What to do if there was an inadequate reassignment clause put in a purchase contract?
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What to do if there was an inadequate reassignment clause put in a purchase contract?
We entered a lease-option on a home with $20k down ($15k to the seller and realtors, and $5k in an escrow account). We asked our realtor to include in the contract that we would like the ability to reassign the purchase of the home if we couldn’t buy it and include it in the contract. She led us to believe this was settled by putting our names and “or assigned” on the signature line of the contract. Now we are being told by our our realtor that we cannot reassign the property to another buyer. Did our realtor make a mistake? Do we have any kind of leg to stand on to get our money back?
Asked on December 28, 2010 under Real Estate Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Your realtor probably did err. Usually, contracts may be assigned as long as there is nothing specifically prohibiting assignment. However, a common exception are contracts to purchase real estate, since (1) real estate almost always gets special treatment under the law and (2) purchasing real estate involves (unless its an all cash purchase, no financing necessary) the buyer also qualifying for the purchase.
If there is nothing in the contract specifally forbidding assignment and you have a buyer who can purchase for all cash on the day of proposed reassignment, you could probably push this through. But if it's a buyer who will want to pay over time, lease, needs to be qualified for financing, etc., the seller would have good grounds to refuse assignment and hold you liable under the contract.
One possibility is to have a second contract, where you remain liable to the seller but the new party then subleases and/or purchases from you...that way, as long as the new party comes through, you'll get your money.
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
I think that it would be in your best interest to take the contract that you signed to an attorney to read on your behalf. It is very difficult to asses a situation in this type of forum without reading the contract. I would ask the attorny not only about the contract itself but also discuss the issue of who the real estate agent works for in this situation and if the real estate agent acted outside their scope of employment or if they violated the rules of agency as they apply i Texas by appearing to represent both parties to the transaction. Some states allow it; some states require that there is paperwork executed that states specifically who the agent works for in the transaction. You may then find a leg to stand on. Good luck.
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