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Assignability of Contracts Concerning Real Property

The term assignment is used interchangeably in the law of contracts and in the law of real estate.[i]  Both in ordinary contracts and contracts concerning real property, it denotes the transfer of rights held by the assignor to the assignee.[ii]  Therefore, it can be said that contractual rights concerning real property can be assigned just as any other contractual right.[iii]  Generally, the right to possess property comes with certain duties and liabilities.  Through an assignment, the assignor transfers the complete remainder of the interest to the assignee whether rights or duties.  Following assignment of real property, the assignor cannot retain any sort of reversionary interest.[iv]

The liability of an assignee after an assignment of real property depends upon the terms of the assignment.  In general, “the assignee has privity of estate with a lessor.”[v]

If the assignor agrees to continue paying rent for the real property to the lessor and defaults in payment, then the lessor can sue the assignor under the original contract signed by him/her.  The lessor can also sue the assignee because, by taking possession of the property interest, the assignee has undertaken to perform all the duties under covenant including payment of rent.[vi]

Further it was held in Davidson v. Dingeldine, 295 Ill. 367 (Ill. 1920) that executory contracts for the sale and purchase of real property can also be assigned and the interest acquired through such an assignment is protected and can be enforced in a court of law.  However, in Lucas v. J. H. Gross Motor Car Co., 32 Ohio App. 183, 184-185 (Ohio Ct. App., Hamilton County 1927), the court held that  a contract for a personal service is not assignable.  In Gomes v. Ern-Roc Homes, Inc., 70 Misc. 2d 658, 659 (N.Y. Civ. Ct. 1972), it was held that contracts to paint a house, to supply electric power for a certain period, for the erection of a building, and for the repair of a defective or leaking roof cannot be considered personal contracts and therefore cannot be assigned.

[i] http://www.experiencefestival.com/a/Assignment_law/id/1920262

[ii] Id.

[iii] http://en.wikipedia.org/wiki/Assignment_(law)

[iv] Id.

[v] Id.

[vi] Id.

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