Distinction Between Assignment And Other Transfers

An assignment is the transfer of a property right, title, or interest under an agreement to some particular person.[i]  However, in In re Ashford, 73 B.R. 37, 39 (Bankr. N.D. Tex. 1987) every transfer of interest is not an assignment.  It depends on the intention of the assignor.[ii]  Therefore an assignment is different from other types of transfers like a sublease, a novation, or a subrogation.

Although the difference between a novation and an assignment is relatively narrow, it is an essential one.[iii]  “Novation is a mechanism where one party transfers all its obligations and benefits under a contract to a third party.”[iv] In a novation, a third party successfully substitutes the original party as a party to the contract.  “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”  In an assignment, the parties to the contract do not change and privity of contract still exists between the original parties. The consent of the third party contracting is not necessary in an assignment.[v]

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises.[vi]  However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment.[vii]  Further, in a sublease, the original tenant is not released from the obligations of the original lease.  However, in an assignment, both the assignee as well as the original tenant, is bound by the covenants of the original lease.[viii]

Subrogation is the substitution of one person for another.[ix]  It is an equitable remedy where one person steps into the place of another and takes over the right to a claim for monetary damages to the extent that the other could have asserted it.[x]  In contrast, an assignment is a formal transfer of property or property rights.

[i] http://www.lectlaw.com/def/a080.htm

[ii] In re Ashford, 73 B.R. 37, 39 (Bankr. N.D. Tex. 1987)

[iii] http://www.netlawman.co.uk/info/novation-assignment.php

[iv] Id.

[v] Id

[vi] http://www.dallaslandlordlawyer.com/Sublease_and_Assignment.htm

[vii] Id.

[viii] Id.

[ix] http://www.answers.com/topic/subrogation

[x] Jones Cooling & Heating, Inc. v. Booth, 99 N.C. App. 757, 759 (N.C. Ct. App. 1990)