Posted by Stacy (AZ) on May 17, 1999 at 18:19:51:
…and I agree with what you are saying. My SALES contracts have this clause built in. This contract is not assignable.
Stacy
The “And/Or Assigns” dilemma - Posted by Matthew Chan
Posted by Matthew Chan on May 17, 1999 at 02:42:52:
In reviewing both Legrand’s and Bronchick’s advice about including the “and/or assigns” clause in a contract, they seem to have opposite views.
Legrand claims that you should NOT put the “and/or assigns” clause because it makes you look like a “seminar graduate” where all the gurus tell you to put it in. Legrand says it will scare some deals away. Additionally, he claims that in the absence of a statement the prohibits assignment, you can actually STILL assign.
Bronchick says you SHOULD put the “and/or assigns” into a contract. I either forgot or missed why you should include it from his perspective. He has a lot of tapes so I am not sure which one he said it in or in what context.
My current stand (for now) is to simply leave it off mainly because I have no intentions of assigning anything (yet).
Can someone help clarify? Thanks!
Far less academic… - Posted by CarolFL
Posted by CarolFL on May 17, 1999 at 18:40:12:
When a seller or their agent objects, I say very offhandedly, "I will probably want the corporation to take title ", and that generally cools their jets.
If someone objects strenuously (like some REO’s - and of course, HUD / VA), I drop it and don’t make an issue.
JUst my 2 pesos .
Carol
How about an Assignment Clause? - Posted by ChrisG
Posted by ChrisG on May 17, 1999 at 18:18:27:
Like the one below in your contract that way you don’t have to write “and or Assigns” by your name.
ASSIGNMENT: This agreement is fully assignable by either party at any time.
Re: The “And/Or Assigns” dilemma - Posted by Bassman
Posted by Bassman on May 17, 1999 at 14:52:38:
You may want to review Legrands material a little closer. His biggest problem with the " and/or assigns"
is mainly when dealing with Institutionally owned i.e Banks properties , HUD , VA,FHA . Most motivated sellers could probably care less, as long as you are relieving them of their property/ problem.
His other point is that when you are closing with your buyer you will only have the title in your / corp name for a few minutes anyway and that way your buyer doesnt see what price you paid for it. This may be why so many people are having problems getting deals accepted when dealing thru RE Agents , yah think?
Just my thoughts.
Re: The “And/Or Assigns” dilemma - Posted by JPiper
Posted by JPiper on May 17, 1999 at 09:38:15:
Just call me a “seminar grad”?..I put “and/or assigns” in all my contracts?..I have for years. I might add, it has NEVER been an issue.
Just so that you know, I think there are some conditions in which contracts are NOT assignable?.at least in some states. One of those conditions is when the contract contains owner financing. It used to be that in California any contract containing owner financing provisions was NOT assignable unless there was a clause permitting the assignment, or unless the contract contained “and/or assigns”. It’s been a while since I’ve had a lawyer’s opinion on this for California, so it’s possible that this has changed?.but I doubt it.
Just a quick story. One time, in California, I had sold a property to two buyers buying the property as tenants in common?..both real estate agents. Their deal was an 80/10/10 deal?.10% down, a new 80% first, and me carrying a 10% second. Not long after the we had agreed to the terms, a new buyer makes an offer for the property?..at a slightly higher price, all cash. Naturally, I would have preferred to take this offer but I’m already under contract. So I accept the new contract too?..as a backup offer, subject to the cancellation of the first contract.
Now, as fate would have it, one the first buyers calls me up. She tells me that her partner wants to back out of the deal, and that she is unable to close without the partner. But she then tells me not to worry, that she drove her brother-in-law past the property?and that he wants to buy it under the same terms that she had?and that she is going to assign her contract to him. She had no clause permitting this assignment, and did not have “and/or assigns” in the contract.
Here’s what I informed her: A) I sold the property to her and a partner. Part of the contract contained a seller carried second. I felt like I was safer with two people on that second, rather than one person who I had not had an opportunity to check out. B) That I had a second offer at a higher price without the seller financing?.and that I would not approve an assignment, and would not close with her assignee. I would simply terminate the contract but I would not agree to an assignment?and that such assignment with this type of contract was illegal in the state of California.
She hit the roof?..told me I was absolutely wrong and that she was going to sue for performance. I said, OK with me. She went to her lawyer, and presumably based on his advice, closed the deal with her original partner?.I heard nothing further about how she had the right to assign under the particular conditions of this particular contract.
Whether California is unique in this particular provision I can’t say. My advice though would be to check this out for your state with qualified legal counsel. I continue to include “and/or assignee” in all my contracts to this day. One further point: regardless of what state I was selling in?.if I were presented with the above scenario I would balk as a seller, personally. The way I see it is that a contract that provides for seller financing should also carry with it the right to check out that seller as to whether I would want to finance him. So if you run up against a seller like me, and you have owner financing, and you wish to assign without an assignment clause in your contract?.expect a problem. Because a seller like me isn’t going to go along with your wishes.
JPiper
Re: The “And/Or Assigns” dilemma - Posted by Jay
Posted by Jay on May 17, 1999 at 09:33:36:
I was wondering about this also. I got my contract forms from the local MLS office, and they all have a “will not assign” clause built in. I’ve been crossing this clause out on my offers. I guess this looks kinda bush league…Where can I get some purchase and sale forms that do not contain this clause?
Thanks,
Jay
Re: The “And/Or Assigns” dilemma - Posted by Stacy (AZ)
Posted by Stacy (AZ) on May 17, 1999 at 03:16:09:
This has been discussed many times on this newsgroup. There are definately different points of view, along with different laws in each state, which makes it impossible to make a blanket statement.
In AZ, for example, any contract is assignable unless otherwise stated within the contract. However, it is key to this discussion to understand that when you assign a contract, you are NOT relieved from the liability to perform as agreed in the contract. If you assign a contract to a Buyer who does not perform under the original agreement, the seller can come after you to perform.
So, I get agreement from the seller to hold me harmless if I assign, in writing. I actually have a clause in my original contract in this regard (as in the Realtor’s contract in Florida, for example), but some of the experts here have the seller sign a separate agreement for this protection. My assignment contract has the assignee agreeing to uphold all terms of the original contract, and holding me harmless. So, I feel protected from both sides.
But, the consensus seems to be to include the assignment clause in the contract when you think you will want to assign, whether it’s required or not. My advice, if you don’t think you will be assigning the contract, leave it out, or strike it from the contract if the seller complains. This is just my take, and I feel I’ve been down the same road before you.
Stacy
I’d LOVE to sell you property! - Posted by Redline
Posted by Redline on May 17, 1999 at 14:01:24:
Piper: So if I was the buyer (and you the seller) and our contract said it was assignable and I came to you and said I wanted to assign and I wanted you to approve my assignee then you would be OK with it right? (granted the new buyer was good) … or would you not sign an assignable contract alltogether (with or without owner finance)?
Thanks,
RL
Re: The “And/Or Assigns” dilemma - Posted by Bob
Posted by Bob on May 18, 1999 at 20:13:51:
Hi Stacy,
Bob here in AZ also.
I’ve just teamed up with a group of ALL CASH investors who taught me how to work up an “Offer to Purchase” (ie. for myself [the buyer] AND the seller to sign). Their manual also includes a standard Assignor/Assignee contract (ie. to collect a small fee just in case I don’t want to get involved with the TOTAL flipping process of foreclosures).
Anyway, where can I get that agreement (ie. to give to the seller “to hold me harmless” if I assign)? AZ Assn. of Realtors on Scottdale Road??
Hope to meet you someday and thanks for your response!
Bob
Re: The “And/Or Assigns” dilemma - Posted by Matthew Chan
Posted by Matthew Chan on May 17, 1999 at 03:49:10:
Thanks for the reply. On a side note, I did not realize it had been discussed here at length before. Or I did not notice it at the time (hard to read all the postings here, there are so many). Plus, I really didn’t think much about it until I saw and heard that word “assign” being discussed repeatedly in my materials. It finally bugged me enough to “come out”, so to speak.
Re: I’d LOVE to sell you property! - Posted by JPiper
Posted by JPiper on May 17, 1999 at 15:50:49:
“So if I was the buyer (and you the seller) and our contract said it was assignable and I came to you and said I wanted to assign and I wanted you to approve my assignee then you would be OK with it right?”
Seems to me you’re asking two different questions. If our contract said it was assignable, I don’t have any choice?.I have agreed to permit an assignment by contract. If you’re asking me if I would release liability under that assignment, that would depend on the circumstances?..that’s still my choice unless you have a provision in the contract that I agree to release your liability upon your assignment (the contract would not contain this provision because I would not agree to it).
“or would you not sign an assignable contract alltogether (with or without owner finance)?”
I would not agree to an assignment provision as the seller in a contract where I had granted any form of owner finance, unless it also included a provision that also required my prior written approval. In fact, in many contracts as a seller my contract contains a provision that states no assignment is permitted unless I have granted prior written approval.
What I was referring to in my original post was a contract that contained no assignment clause, nor did it contain “and/or assignee” after the buyer’s name, but it DID contain owner financing on my part. Any attempt to assign on the buyers part given this scenario I would balk at, unless I had the right to approve or disapprove this new buyer. It’s my personal opinion that if the buyer contemplated assigning a contract containing owner finance, that he should have contemplated this in his contract with me. Obviously, the credit of the buyer would have an impact on my decision to finance ANY buyer. To me, any attempt to assign a contract with owner financing without giving the buyer the right to approve the new buyer would be unfair as far as I’m concerned.
So I guess the moral here is that if you’re buying a property from me, or anyone like me, and you don’t have an assignment provision in your contract, and the contract contains owner financing?..don’t count on assigning it without a battle.
JPiper
Re: The “And/Or Assigns” dilemma - Posted by Stacy (AZ)
Posted by Stacy (AZ) on May 18, 1999 at 22:14:02:
I’ve replied to you via email, Bob.
Stacy
Re: I’d LOVE to sell you property! - Posted by Redline
Posted by Redline on May 17, 1999 at 22:26:14:
OK - that works for me. I’d have an assignment clause from the beginning and you’d insist on prequalifying my new buyer and I’d have no problem with that. If they qualified then you’d release me from liability. Good deal. No we can do business! 
RL
Re: I’d LOVE to sell you property! - Posted by JohnBoy
Posted by JohnBoy on May 17, 1999 at 17:31:48:
Hi Jim,
Here’s something to consider when allowing a clause to let a buyer assign their contract subject to your written approval.
A guy I worked for in a California had a commercial lease in a shopping center. He decided to sell the business and assign the lease over to his buyer. The lease had a clause that said the lease could be assigned subject to the landlords written approval. The buyer was more financially qualified than the seller was when he took out the lease. The landlord refused to accept the buyer and wouldn’t allow the seller to assign his lease to them, nor would the landlord agree to give the new buyer a new lease. Sounds pretty simple to me. The lease clearly stated any assignment was subject to the written approval of the landlord and for whatever reason they chose not to accept the new buyer.
The sellers attorney steps in and tells the seller to go ahead and assign the lease anyway. Since the buyer is well qualified and the landlord can’t give a reasonable good reason why they refuse to accept the new buyer then they can’t stop him from assigning his lease. Since the lease had an assignment clause that would allow the tenant to assign, even though it was subject to the landlords written approval, they were being completely unreasonable and wouldn’t have much to stand on if they went to court over it. Go figure? I guess that means a court would rule if favor of the assignment if you can show the buyer is qualified and the landlord is being unreasonable? So much for trying to be a nice guy being subject to your approval!
In the same deal the seller had a lease on some of the equipment. That equipment lease clearly stated the lease is not assignable. The seller called the leasing company to see if he could assign the equipment lease to the new buyer. The leasing company denied the new buyer. The seller wanted out so bad he went ahead with the sale leaving that lease in his name and had the seller just make the payments on the equipment to him instead. After the sale closed the new buyer never made any payments. They would instead send a list of things that were wrong with the store after they took over. The sellers father had cosigned on the equipment lease so he got stuck with the payments.
About a year later the new buyer sold the business to someone else. By the time the seller found out about the sale it was to late to stop it and the original buyer splits leaving the country with all the cash. His new buyer got everything while the original seller lost out on the balance of his note owed to him and stuck his father with the balance of the lease payments on the equipment that was now owned by someone else. They couldn’t go back after the equipment since the sale closed between his buyer and their new buyer.
Now I don’t know how much difference there would be between an assignment clause in a commercial lease Vs. a seller financing contract, but after I seen what happened in this deal and based on what that original sellers attorney was saying just by even having an assignment clause in a contract…I’ve come to the conclusion that if I’m the seller or the landlord, never allow an assignment clause of any kind period! If later my tenant or buyer wanted to sell or leave and had someone they wanted to assign their contract to then we can talk about it at that time. If I agree to the new tenant or buyer then we could always amend the contract at that time. If I don’t want to accept them then I don’t ever have to worry about getting stuck with someone I didn’t want for what ever reason I decided and be accused of being unreasonable. If the contract says it’s NOT assignable then I don’t ever have to worry about some judge twisting the wording around in my contract accusing me of being unreasonable if I had an assignment clause subject to my written approval. Does that make sense or do you think that’s being to protective?
Re: I’d LOVE to sell you property! - Posted by JPiper
Posted by JPiper on May 17, 1999 at 18:26:05:
I’m comfortable as a seller with a clause of the type: “This contract may not be assigned without prior written approval of seller.” I’m not trying to have a blanket denial of all assignments. But I do want the right of approval of an assignee. If I felt that the new buyer was equal to or better than the original buyer I would approve the assignment.
By the way, in your story it appears that the issue did not go to court to determine what was reasonable. It appears that this was just the opinion of the seller’s attorney that the landlord was withholding reasonable consent. It also appears that the landlord did not pursue his rights under the contract. It further appears that the landlord could have had a claim against the seller upon default, since the landlord did not release the seller’s liability. But as with most rights, they take a court action to enforce?.which the landlord did not avail himself of.
JPiper
Re: I’d LOVE to sell you property! - Posted by Stacy (AZ)
Posted by Stacy (AZ) on May 17, 1999 at 17:44:14:
Johnboy-
You said:
.I’ve come to the conclusion that if I’m the seller or the landlord, never allow an assignment clause of any kind period!
In AZ, this would allow the assignment, since it is not stated otherwise in the contract. Is this what you really wanted to say?
Stacy
Re: I’d LOVE to sell you property! - Posted by JohnBoy
Posted by JohnBoy on May 17, 1999 at 20:37:47:
Your right, it didn’t go to court. If I remember correctly, the landlord was willing to allow the assignment IF the new buyer would pre-pay a years rent. The buyer absolutely refused. The buyer had $900k cash sitting in the bank, but they didn’t have any prior experience in owning this type of a business. So now it’s down to a matter of opinion on whether this buyer is qualified or not. (at least in the sellers mind anyway) The landlord says, pre-pay a years rent and they will qualify the buyer, in which the buyer is refusing to do. The seller is desperate to sell at this point and starts crying to his attorney that the landlord is stopping him from selling his business. The sellers attorney threatened the landlord with a lawsuit for trying to interfere with the buyers right to sell his business. The attorney claimed since the buyer was financially qualified they didn’t have reasonable grounds to deny the assignment. They went through with the sale and the landlord excepted rent payments from the new buyer. Whether or not that would constitute an acceptable assignment by the landlord or not I wouldn’t know. As you said, it was never challenged in court. The landlord backed down and evidently allowed the sale to go through.
As far as allowing someone to assume a contract I wouldn’t have a problem with it either as long as I felt the new buyer was equally or better qualified than the original buyer. The question is, would by allowing an assignment clause subject to my approval be something that could have a possibility of ever coming back to haunt me?
Assuming my buyer decides to sell for whatever reason and they find a buyer that has some money to put down, where my buyer was able to get part of or all of their money they paid back out of the property. They want to assign the balance of their contract over to their buyer. In my opinion their buyer doesn’t qualify to meet my qualifications for whatever reasons. My buyer has a different opinion and thinks I’m being unreasonable. (Which in my opinion, who cares what he may think, it’s my property until I’m paid in full and if I feel the new buyer doesn’t qualify, then they don’t qualify!) So now my buyer decides to run and cry to some hungry attorney that’s coming back making threats to sue me claiming I’m being unreasonable and preventing his client his right to sell his property by unreasonably withholding his right to assign the contract. Meanwhile if my buyer follows through with this suit then I’m out time and money by having to pay my attorney to defend myself and going to court, not to mention the possibility of getting some idiot for a judge that ends up ruling against me.
Is this making a mountain out of a molehill or wouldn’t it just be better to be safe than sorry by not allowing an assignment in the contract? I could always allow my buyer to assign later or let him out of the contract by writing a new contract with his buyer if I approved it and avoid this from ever becoming a possible problem in the future.
Re: I’d LOVE to sell you property! - Posted by JohnBoy
Posted by JohnBoy on May 17, 1999 at 17:49:45:
No.
What I ment was to not allow any assignment wording where you would consider assigning at all.
Use a clause that clearly states “This contract is not assignable and shall NOT be assigned for ANY reason”.
Nice catch! Thanks!