Assignment of Contract in Real Estate: How It Works

An assignment of contract in real estate is when the buyer named in a purchase agreement transfers their rights and obligations under that agreement to a new buyer, usually for a fee. The original buyer is the assignor, the new buyer is the assignee, and the seller still sells the property on the terms already agreed. It is the most common way wholesalers get paid.

This guide explains when a contract can be assigned, what goes in the assignment agreement, how the money moves at closing and the mistakes that cause deals to fall apart. It is general education, not legal advice; assignment rules and required disclosures vary by state.

How an assignment works, step by step

You sign a purchase agreement with the seller. The buyer line usually reads “Your Company LLC and/or assigns,” and nothing in the contract prohibits assignment. See what “and/or assigns” means.
You find an end buyer. Typically a cash investor from your buyers list.
You and the end buyer sign an assignment agreement. The buyer agrees to step into your contract and pay your fee, and usually puts down a non-refundable deposit with the title company.
Title receives both documents. The title company or closing attorney gets the original contract and the assignment and prepares one closing.
The deal closes. The end buyer pays the contract price plus your fee. The seller receives their price, and your assignment fee is paid to you on the settlement statement.

A quick example

You contract to buy a house for $140,000. An investor agrees to pay $150,000 for it. You sign an assignment agreement with a $10,000 fee. At closing the investor brings $150,000 plus their closing costs, the seller is paid $140,000 less their costs, and you receive $10,000. You never take title. These numbers are illustrative only.

What a real estate assignment contract includes

Section	What it covers
Parties	Assignor (you) and assignee (end buyer), with entity names
Reference to the original contract	Property address, seller name, contract date; the purchase agreement is attached
Assignment fee	The amount, and that it is paid at closing through title
Assignee deposit	Amount, who holds it, and that it is non-refundable except for seller default or title failure
Assumption of obligations	The assignee accepts every term of the original contract, including the closing date
As-is acknowledgment	The assignee has done their own inspection and relies on their own numbers
Default	What happens if the assignee fails to close
Signatures	Both parties, dated

Our free wholesaling starter kit includes a starter assignment agreement. Have a local attorney review any template before you use it.

When can a contract be assigned?

In general, contracts are assignable unless the contract says otherwise or the law restricts it. In practice, check four things:

The contract itself. Some state association forms and many bank-owned (REO), HUD and short sale contracts prohibit or limit assignment.
State wholesaling rules. Several states require written disclosure to the seller that you intend to assign, give sellers cancellation rights, or require a license for regular wholesaling. Look up your state in our wholesaling laws by state guide.
The seller’s understanding. Tell the seller in plain words that you may assign the contract to a partner or another buyer. It is the honest approach and it prevents surprises at closing.
The title company. Use an investor-friendly title company that closes assignments routinely.

Assignment vs. double closing

If a contract cannot be assigned, or your fee is large enough that you would rather it not appear on the seller’s settlement statement, the alternative is a double closing: you buy from the seller and resell to the end buyer in two back-to-back transactions. It costs more in closing fees and may require short-term funding. A novation is a third option in some situations.

Common mistakes

Signing a contract that prohibits assignment without noticing.
Taking no deposit, or a refundable one, from the end buyer.
Leaving too little time between the assignment and the closing date.
Marketing the property itself rather than your contract rights, which can look like unlicensed brokerage.
Skipping a state-required disclosure.

For the purchase agreement side, read every clause of a wholesale real estate contract explained. If you want your first assignment reviewed before you send it to a buyer, that is part of our wholesaling mentorship program.

Want to see what your fee could be? Use the free wholesale fee calculator.

Frequently asked questions

Is assignment of contract legal?

Assigning your rights in a purchase contract is generally legal when the contract allows it. Some states add disclosure, cancellation or licensing rules for wholesalers, so check your state.

Does the seller have to agree to an assignment?

It depends on the contract. If the agreement permits assignment, separate consent is usually not required, but some contracts require the seller’s written consent and some states require disclosure. Telling the seller up front is the best practice either way.

Who pays the assignment fee?

The end buyer. The fee is collected by the title company at closing and paid to the wholesaler.

What happens if the end buyer backs out?

You remain responsible for the original contract. You can find another buyer, close yourself, or cancel if you are still within a contingency period. This is why a non-refundable buyer deposit matters.

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