Florida Realtors Legal Hotline fields many calls from members who are perplexed by the paragraphs about assignability of the contract. Most callers want to know how it should be completed and whether it applies to their current transaction.

Since Realtors rather than actual buyers or sellers complete form contracts, it’s important to understand the legal concept of assignment.

In the FloridaRealtor/FloridaBar contracts (FR/Bar)*, assignability of contract is addressed in paragraph 7. This section requires the parties to check one box to indicate if the buyer is able to assign the contract (or not), and whether the buyer would be released from liability if the buyer is allowed to assign it (or not).

First, let’s address the concept of assigning a contract: If an assignment of contract occurs, it means that one party to an existing contract (the “assignor”) has handed off the contract’s obligations and benefits to another party (the “assignee”). In the context of the FR/Bar contracts, the assignor is the buyer in the contract and the assignee is a non-party, i.e. another buyer not currently part of the contract.

The next step is addressing the release of liability. The assignor may want the assignee to step into his shoes and assume all his contractual obligations and rights, releasing the original buyer from further liability under the contract. This means that if a buyer assigns the contract, that buyer essentially walks away from the transaction, with the assignee taking on all further obligations currently within the contract. It also means that the seller’s recourse, should the assignee fail to comply with the contract, is solely against the assignee and not the initial buyer.

In applying these concepts to language in the FR/Bar contract, a buyer’s agent should ask the buyer if he/she has any intention of assigning his/her interests in the contract to another party? If yes, does the buyer want to remain potentially liable under the contract should the assignee fail to perform?

If a seller’s agent receives an offer that is assignable, they should ask the seller if he/she is willing to allow the buyer to assign the contract to a third party. If yes, is the seller okay with allowing the initial buyer to just walk away, or does he/she want to hold the initial buyer to the contract terms as far as liability is concerned?

Please note: These are all questions for your customers to answer. A Realtor should refrain from giving legal advice, explaining the concept of assignability, or describing potential outcomes or issues that could arise with an assignable contract. In the event that your questions cause customers to ask even more questions about assignability, you should advise customers to seek legal advice from their attorney.

* For the purposes of this article, the examples referred to herein are based off the language contained in the Florida Realtors/Florida Bar residential contracts. As contract language can and does vary, always refer to the contract used in any transaction for specific language regarding assignability.

Source: Florida Realtors