assignment agreement real estate india

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A Comprehensive Guide to Understanding Assignment Agreements in Real Estate

August 27, 2024

Table of Contents

Assignment agreements are a crucial aspect of real estate transactions, allowing buyers along with the help of the builder/developer to transfer their rights and obligations to another party. In this guide, we’ll delve into the world of assignment agreements, exploring their benefits, types, and the role of property management companies in facilitating these agreements.

What is an Assignment Agreement?

An assignment agreement is a legal contract that transfers the rights and obligations of a buyer in a real estate transaction to another party, known as the assignee. This agreement allows the original buyer to exit the deal, and the assignee takes over the contract, assuming all responsibilities and benefits.

Benefits of Assignment Agreements

Flexibility: Assignment agreements offer buyers an exit strategy, allowing them to transfer their rights and obligations to another party.
Risk Management: Assignees can assume the risks associated with the property, freeing the original buyer from potential liabilities.
Profit Potential: Assignees can profit from the assignment by purchasing the property at a discounted price and selling it at a higher market value.
Save registration costs: The original buyer (Assignor) can exit the deal without registering the property and hence saves property registration cost, though he may have to pay some money as assignment fee to the builder/developer as part of the original sale agreement

Types of Assignment Agreements

Wholesale Assignment: A wholesaler assigns the contract to a buyer, typically at a markup, without actually owning the property.
Investor Assignment: Investors assign contracts to other parties, often to limit their risk exposure or free up capital.

Role of Property Management Companies

Property management companies play a vital role in assignment agreements by:

Facilitating Communication: Property managers act as intermediaries between buyers, sellers, builders and assignees, ensuring smooth communication.
Conducting Due Diligence: Property managers perform thorough property inspections, identifying potential issues and risks.
Managing Assignee Relations: Property managers handle assignee inquiries, ensuring a seamless transfer of ownership.

Best Practices for Assignment Agreements

Clearly Define Terms: Ensure the agreement outlines all parties’ responsibilities, obligations, and expectations.
Conduct Thorough Due Diligence: Inspect the property, review market data, and assess potential risks.
Seek Professional Advice: Consult with attorneys, accountants, and property managers to ensure a smooth transaction.

In conclusion, assignment agreements offer flexibility, risk management, and profit potential in real estate transactions. Know more about the Documents needed when selling your property in India. Property management companies play a crucial role in facilitating these agreements, ensuring a seamless transfer of ownership and minimizing potential risks. By understanding assignment agreements and working with experienced property managers, buyers and assignees can navigate complex real estate transactions with confidence. Are you a Property owner looking to sell your property where to start connect with us today.

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Tanny --> 12 December 2016

Sale deed versus deed of assignment

While buying a resale property in a co-operative housing society, I have differing opinion on whether a "sale deed" is appropriate of a "deed of assignment" is appropriate. I consulted several people from legal profession and opinion seems to be divided with some saying Sale Deed is mandatory, some saying Deed of Assignment is ok and some even suggesting rather absurdly - "you tell us what you want and we will do that for you".

My question is - I am looking for specific guidance of whether I register my agreement with a Sale Deed or with a Deed of Assignment. Please can you guide.

10 Replies

Ms.Usha Kapoor (CEO) --> 13 December 2016

First draft asale deed and thendraft adeed of Assignment and register both of them.If you appreciate this answer please give me all my profile likes.

Kishor Mehta (CEO) --> 13 December 2016

Kumar Doab (FIN) --> 13 December 2016

Agreed with Mr. Kishore Mehta.

Rama chary Rachakonda (Secunderabad/Telangana state Highcourt practice watsapp no.9989324294 ) --> 13 December 2016

In real property transactions, a deed of assignment is a legal document that transfers the interest of the owner of that interest to the person to whom it is assigned, the assignee. When ownership is transferred, the deed of assignment shows the new legal owner of the property.

An "absolute sale" deed is defined by having no conditions attached to the sale except the buyer's payment of the purchase price. When the seller signs and delivers the absolute sale deed, this is generally recognized by law as the moment of sale.

Tanny --> 13 December 2016

Thank you for explaining the difference between a Sale Deed and a Deed of Assignment. However could you explain in my case which is the one I would go for?

rajeev sharma (Advocate Ex senior manager law ) --> 13 December 2016

please ask reseller what document the builder has executed in his favi\our .if it is sale deed then dont compromise get sale deed executed in your favour

even the seller has a deed of assignment from his previous purchase. In that case will a sale deed or a deed of assignment be appropriate?

Adv. K.S.A.Narasimha Rao ([email protected] ) --> 13 December 2016

Dear Tanny,

Basing on the rights possessed by your prospective seller, the nominclature of the document depends on.

If your Prospective Seller is having only right of possession in respect of the property, then he can only make a deed of Assignment. But if your Seller is having absolute powers to sell the flat, then you can use nominclature as "Sale Deed".

Kindly clarufy if the deed of assignment be cancelled by assignor.

Aseem Koradia --> 15 December 2016

The name of document is immaterial. The content of the document will remain the same. interpretation will be from the content of the document.

Aseem Koradia

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PGN Property

What is Assignment Agreement? How to Register Assignment agreement for purchase of property?

Post author By PGN Property - Bangalore
Post date October 7, 2023

An assignment agreement involves transfer of property from an original party (also know as real-estate wholesaler or assignor or first party) to a new party (also know as assignee or second party).

Assignment is one of the real estate investment strategy, it can involve time and financial pressure but the assignor can make potential money

Assignment works on the following pattern: The first party or assignor finds a property (mostly an under construction property) and enters into a sale agreement with builder to purchase the property. The sale agreement consist of seller details , buyer details, buying price, tentative date of possession etc..

When the first party finds a new buyer that can fulfill the terms & conditions of principle sale agreement like buying price and possession date. The first party assign a tri-party agreement with new buyer, the try party agreement between first party (assignor), second party (assignee) and third party (builder)

The first party (assignor) collects an assignment fee for finding a new buyer, take around 3–5 years to realize the returns in assignment strategy.

For example:

The buying price in principle agreement is Rs. 50,00,000 (at the time of project launch)

The buying price in assignment agreement is Rs, 70,00,000 (at the time of possession)

The assignment fee is Rs, 70,00,000–50,00,000 = 20,00,000/-

Following is the cost to register assignment agreement (subject to Karnataka)

Stamp Duty: 0.5% of buying price
Registration fee: Rs. 200
Scanning Rs. 35 per page

Documents required to register assignment agreement:

Principle sale agreement between assignor or builder
PAN of assignor, assignee and builder

Follow the below procedure to register assignment agreement:

Draft the assignment agreement in word document (shared the mock draft below)
Submit an application in Kavari Online Services. Usually application approves within 2-3 working days and book a slot for registration
Pay the government fee (stamp duty, registration fee and scanning fee)
Print the draft on A4 size paper
Register the assignment agreement in sub-registrar office

All the parties including assignor, assignee, builder and two witnesses must present in sub-registrar office for registration of assignment agreement.

In the above answer, principle sale agreement means the sale agreement between assignor and builder
One Closing means one transaction take place which the end buyer (assignee) pays the seller for the property purchase.
Two closing means two transactions take place in succession for one property, the 1st buyer (assignor) purchases the property from seller rather assigning, Then, immediately resell said property to end buyer (assignee)
Most of the real-estate investors prefer “One Closing” rather “Two Closing” to avoid the payment of stamp duty. Assignment agreement is most preferred option for investors because it has one closing.
Assignment agreement can be registered or un-registered (Not mandatory to register)
To process home loan, assignment agreement should be either registered or adjudicated 0.5% of buying price
If you are self-financing the purchase (without home loan) and the property is ready to occupy. You may skip the assignment agreement and register the sale deed as this may save your time and take possession immediately after deed registration

Below is one of the latest draft we made for our client, sharing below for your reference:

We provide assistance to execute Assignment Agreement. To opt for our service, please write to us [email protected] or Whatsapp to + 9 1 – 97424-79020.

Thank you for reading…

Tags Agreement Agreement , Assignment Agreement Registration

Agreement Draft

Assignment of real estate contract.

August 7, 2022

SubjectProperty:_________________________________________________ Legal Description: _____________________________________________________________ ______________________________________________________________________________

This agreement is made between Your Company (ASSIGNOR) and Investor X (ASSIGNEE) regarding purchase of above referenced SUBJECT PROPERTY.

Whereas Your Company (BUYER)__ has entered into a Purchase and Sales Agreement with __________ (SELLER)__ for the purchase of SUBJECT PROPERTY______________________ and whereas BUYER wishes to assign its rights, interests and obligations in the Purchase and Sales Agreement, it is hereby agreed between ASSIGNOR and ASSIGNEE as follows:

1. ASSIGNEE shall pay ASSIGNOR a NON-REFUNDABLE assignment fee of Rs. 60,000 (payable Rs. 30,000 with signing of contract and balance at close). 2. Assignee’s inspection period shall expire upon execution of this Assignment. ASSIGNEE accepts all terms and conditions of the contract for Sale and Purchase between BUYER and SELLER in its entirety. 3. ASSIGNEE acknowledges receipt of legible copies of the original Contract for Sale and Purchase in its entirety including all Addendums associated with this transaction. 4. Additional terms and conditions of this Assignment are as follows: This assignment contract is non-assignable without the express written consent of the ASSIGNOR. No changes to the Purchase Contract can be made without written Consent of Company 5. Disclosures and Acknowledgement: a) ASSIGNOR and affiliated associates make no warranty, expressed or implied, regarding inspection reports or other reports provided to ASSIGNEE by ASSIGNOR or third parties concerning this property. b) ASSIGNEE acknowledges they are conducting a transaction dealing directly with ASSIGNOR for the purchase of SUBJECT PROPERTY. c.) ASSIGNEE is not relying upon or being represented by a REAL ESTATE BROKERAGE in this transaction.

AGREED AND ACCEPTED

#1 ASSIGNOR (____________________________________) Signature:________________________________________ Date:_______________ #2 ASSIGNOR (____________________________________)

Signature:________________________________________ Date:________________

ASSIGNEE(________________________________________)

Signature:_________________________________________ Dated:_____________