In response to Rob. B. and his somewhat disparaging and "know it all" remarks about Mississippi or my knowlege or experience as a Broker and his limited knowlege of an "Assignment" in the real world.
As indicated in my response, I am and have been a Broker for almost 40 years. I have been in involved in almost every kind of assignment and 75% of my commercial deals involve an assignment in some form or fashiion. Ninety percent of my deals are commercial transactions.
No matter what you do in the real estate business, development business, or construction business, if you are a Broker, you are regulated as a Broker. You lose your normal rights as a regular citizen and are then regulated as a licensed Broker, no matter what. You can't be just a developer, when you are a Broker governed by respective state laws. There are several southern states that have reciprocity, so a broker could realistically have a license simulatneously in Florida, Alabama, Mississippi, and Louisiana. The laws are different in each state and a requirement for a mulitstate broker would include passing that state's real estate law test.
In a cash, commercial transaction, there are only a couple of closing documents really necessary. In a contract assignment and payment prior to closing, only a simple assignment agreement and a payment from the assignee is necessary. There is no closing or escrow required for the assignment transfer and payment.
If a contract owner is smart and the contract which always requires consideration is written correctly, the contract principal should get paid "upon the assignment". You are then out, absolved of further liabliity in the contract and don't even have to show up for the closing, if there is one. My contracts are always written where any Earnest Money is the "total liability" and there is no further recourse, and I always have the "right to assign the contract" which is a requirement for said assignment. And contrary to what Rob B. suggests, why would you ever, ever wait till closing where you have lost control of the contract and may not ever get paid or why would you ever get a seller involved in your new transaction with an assignee that you have no control over and potentially let a contract get to the last minute in time.
There are very few times when a seller likes to see a property sell for a higher price prior the original contract closing. What happens when you get to the closing table without any payment for the assignment and the Seller and Assignee get together and decide to make a new deal without you? What then Rob B? What do you think a guy like Donald Trump would do to you?? There are a lot of them around. Waiting until closing to get paid for an assignment is a lesson in how to lose some sleep.
In my first $10Million dollar deal in Tampa in the mid 80's, everyone (builder partner signing the note and the lender) at the closing table had a nice private jet but me. My only leverage was ownership of the contract. That was the first one where I received 100M for an assignment fee. The loan committment was done months prior.
In my first $10Million dollar deal in Tampa in the mid 80's, everyone (builder partner signing the note and the lender) at the closing table had a nice private jet but me. My only leverage in the deal was ownership of the land contract. That was the first one where I received 100M for an assignment fee. The loan committment was done months prior. The closing on that deal and another similiar deal in Orlando took from 8 am to past 5 pm for each one. I can assure you there was hours of closing legal mumbo-jumbo consisting of a one inch thick loan committment and a one inch thick construction agreement.
I would suspect that Rob B. has been involved in very very few contracts where Rob has actually received any compensation from an assignment. He sounds like a typical broker on the sidelines watching the action. It would be interesting to know how many times Rob B. has actually READ all of the documents completely (legal mumbo jumbo) at a closing, ie, title opinions, deeds of trust, deeds, accuracy of surveys, disclosures, HUD or Fannie forms, etc., etc. at a closing or even attended.
No two states have the same real estate laws and it is up to the closing agent/attorney to handle that part of the transaction. Keep in mind Brokers can't give formal legal advise. In Mississippi all Title Insurance Policies are written by and all closings are performed by ATTORNEYS!! Closings in Florida are performed by Title Companies.
Regarding the Kevin S. response:
You do not necessarily have the right to sell or assign the rights in a contract unless it is specifically spelled out in the contract. Keep in mind a seller made a deal with a buyer specifically and that buyer may not have the right to assign or sell the contract unless agreed to prior.
"Birddogging fees" are illegal in the states I am familiar with. There
May 11, 2011