When assigning a contract, what should the assignor ensure is permitted in the purchase contract?

An assignment is the transfer of rights and obligations under a contract from one party (the assignor) to another (the assignee). For a purchase contract to be assigned, it must be legally permissible. This quality is known as assignability. While many contracts are assignable by default unless explicitly forbidden, the assignor must ensure the purchase contract does not contain a clause prohibiting assignment. Some contracts may even require the other party's (the seller's) written consent. Therefore, confirming the contract's assignability is a critical step for the assignor.

A. Acceleration: This is a loan provision that allows a lender to demand full repayment upon borrower default, unrelated to contract assignment.

B. A due-on-sale clause: This mortgage clause allows a lender to call the loan due when the property is sold, which concerns financing, not the purchase contract's transferability.

D. Termination: This refers to the cancellation or ending of a contract, which is the opposite of transferring its rights and obligations to a new party.

1. Maryland REALTORS®. (2021). Residential Contract of Sale. In the standard Maryland contract forms, there is typically a specific paragraph addressing "Assignment." For example, Paragraph 26 of the GCAAR Sales Contract (often used in Maryland) states, "This Contract may not be assigned without the written consent of Purchaser and Seller," directly highlighting the need to confirm assignability.

2. Galaty, F. W., Allaway, W. J., & Kyle, R. C. (2022). Modern Real Estate Practice (21st ed.). DF Institute, Inc. Chapter 11, "Real Estate Contracts," explains that a contract can be assigned unless the terms of the contract specifically prohibit it. This establishes the legal principle that the assignor must verify the contract's terms regarding assignability.

3. Maryland Code, Real Property, § 10-101 et seq. The Maryland statutes governing sales of property operate on the foundation of common law contract principles, where the assignability of a contract is a fundamental characteristic unless expressly restricted by the parties within the agreement itself.