An assignment is the transfer of rights or property to another entity. This applies to both real property or personal property, where the transferee or recipient obtains the rights that the transferor or previous owner had before the transfer was made.
Some or all property rights and obligations may be assigned to another person, depending on the agreement which should be specified in writing. The written agreement should bear the information of the transferee and the transferor and other assignments made.
Types of Assignment in Real Estate
This happens when a mortgage is transferred to a third-party from the original lender or borrower. Lenders have been known to sell mortgages to other lenders and other third parties in exchange for payments received.
A mortgage assignment document will be drawn and will provide information about the assignment, where and to whom the borrowers will make future repayments, and other mortgage terms that have been modified.
Mortgage assignment is beneficial for when a buyer doesn’t want to secure a bank loan and for a seller whose property has been in the market for a long time.
A tenant who wants to relocate and end a lease early will benefit from a lease assignment. This is where the rights and obligations of the lease, including rent payments, will be transferred to the new tenant once they signed the assignment document.
Landlords also use a lease assignment to pay creditors through rent payments. If a landlord can no longer make mortgage repayments or files bankruptcy, they have the option to assign rent due under rental property leases to the lender. This means any rental income made will be paid directly to the lender.