Is it Legal to Assign a Real Estate Contract?

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Real estate is a dynamic industry, and with that dynamism comes a multitude of strategies, tactics, and methods of operation. One of the most discussed and often debated strategies is assigning a real estate contract. While many in the industry have an opinion about it, the primary question often arises: Is it legal to assign a real estate contract?

Legality of Assigning Real Estate Contracts

To answer it plainly: Yes, it is. Assigning a real estate contract is, in most cases, entirely legal. But, like many legal matters, the specifics are where the importance lies.

Instances Where Assignments Are Prohibited

While it is generally legal to assign a contract, there are specific instances where it’s not allowed. For example:

  1. Foreclosures: Foreclosed properties have their own set of rules and regulations. In most foreclosure cases, assignments of the real estate contract are not permitted.
  2. Government-Owned Properties: These types of properties come with a different set of rules as well. Typically, government-owned properties will not allow for the assignment of contracts.

In both cases, this prohibition is clearly indicated in the contract, especially under the buyer’s section. Here, there’s often a clause stating that assignments are not allowed.

Why Would Someone Assign a Real Estate Contract?

With its legality clarified, the next question one might ask is, “Why would someone even consider it?”

Popularity Among House Flippers

Assigning a real estate contract has become increasingly popular, particularly among budding house flippers. One of the reasons for this is the allure of the “no money down” scheme. Here’s how it works:

An investor or house flipper enters an agreement with a homeowner. Instead of purchasing the home, they secure the right to assign their contract to another buyer – ideally, for a higher price. This method allows them to profit from the deal without ever technically owning the property.

The Dangers of Inexperience

This strategy’s rising popularity, however, is not without its risks. The Kansas City area, for instance, has witnessed an influx of newcomers eager to get a slice of the real estate pie. While their enthusiasm is commendable, some may not have the best intentions.

Sometimes, inexperienced investors might strike a deal that’s too high from the outset with the original homeowner. This inflated price then makes it challenging for them to find a subsequent buyer willing to take on the contract at such a cost. If they can’t find a buyer, this leaves the original homeowner in a precarious position.

They’re left with a house that hasn’t technically been sold, and there’s ambiguity regarding whether the initial investor (the one who assigned the contract) is legally bound to complete the purchase. This scenario can spiral into a lengthy legal battle, leaving both parties in a challenging and often costly position.


Assigning a real estate contract, while a legitimate strategy, requires a clear understanding of the process, the contract terms, and the local real estate market. For homeowners considering such an offer, or investors thinking of leveraging this method, consulting with professionals in the field is crucial.

For any further queries or to understand the intricacies of real estate contract assignments better, please don’t hesitate to contact us.