What is an assignable contract?
One of the most powerful clauses in real estate investing is "and/or assigns." By putting those three little words in a contract after the name of the buyer, you not only gain exclusive control over the property, but you also create the opportunity to assign your contract to an investor for a fee.
To illustrate, here is an example clause from a normal contract:
Parties ________________________(BUYER) and ____________________(SELLER), which terms may be singular or plural and will include the heirs successors, personal representatives and assigns of Seller and Buyer, hereby agree that Seller will sell and Buyer will buy the following property, upon the following terms and conditions if completed or marked.
The above clause allows you to state the buyer and seller, but it limits you to closing on the property in your own name. You can’t assign it to another person. If you want to create an assignable contract, you need to insert the words "and/or assigns" after the buyer. For example:
Parties ________________________(BUYER AND/OR ASSIGNS) and ____________________(SELLER), which terms may be singular or plural and will include the heirs successors, personal representatives and assigns of Seller and Buyer, hereby agree that Seller will sell and Buyer will buy the following property, upon the following terms and conditions if completed or marked.
There are several reasons for having an assignable contract. The most common use of "and/or assigns" is to gain control of the property, forcing the seller to take it off the market, and then sell your right to buy the property to another investor. You act as a middleman, finding a great deal and then assigning it to an investor for a fee.