California standard forms to add ASSIGNMENT clause?

Question

At the end of this month the CAR (California Association of Real estate) forms are changing.  One of the changes, purportedly, is a clause that will make the standard Purchase and Sale Agreement for single family residences, ASSIGNABLE.

Wholesalers, how do you think this will change your business?

Agents, how do you think this impact traditional buyers in the market?

Out of state investors, are your standard contracts already assignable, if so, how does this help/hurt your business?

Karen Margrave · Answer

@Matt Skinner I totally agree, I think it definitely favors wholesalers, and will legitimize the transactions making them  just one more alternative for sellers, rather than the ugly duckling.

Matt Skinner · Answer

While this may sound like it would limit  assignments...  (Wait for it)

RPA-CA Revised 11/14 DRAFT -- section 22 pg 90 of 10 "ASSIGNMENT: Buyer shall not assign all or any part of buyer's interest in this agreement without first having obtained the separate written consent of the seller to a specific specified assignee. Such consent shall not be unreasonably withheld. Any total or partial assignment shall not relieve buyer or buyer's obligation pursuant to this agreement unless otherwise agreed in writing by seller."

The key phrase is  "Such consent shall not be unreasonably withheld"

It has always required consent of the buyer to assign.  Now the contract will state that the seller better have a damn good reason if he/she wants to say no,

I heard the authors of the revision talk about the new contracts yesterday and they were saying ithis language is specifically for the situation that @karen described.

I think this will be good for wholesalers.

Robert Chuang · Answer

@Matt Skinner

Agreed, I guess it put responsibility on both side. Put me in a different perspective. Thanks

David Oldenburg · Answer

In California, where I do business, whether a contract is assignable has never been an issue. I have changed the buyer many times. Sellers rarely care who buys their home, they just want it sold for as much as they can get, and as quickly as possible.  If i enter into a contract and need to change the buyer later, I just make a phone call, explain the situation, show the proof of funds or approval letter on the new buyer and we move forward.  I am aware of the change to the CAR form here in CA, but I don't think it will impact my business in any way.

Robert Chuang · Answer

@Karen Margrave  thats right, without the approved form we are still talking in air

Karen Margrave · Answer

@Robert Chuang I can see where that could be an issue. I guess we'll have to wait until they actually come out with the revised form and read the wording, and how it's to be used. I don't know why CAR would try to discourage wholesaling if agents are being paid commissions, etc., it may just be that it's become so popular in some areas that incorporating it into the contract makes more sense, and is less confusing to sellers. It would seem to me that if it appears to be part of the standard contract, sellers would be less apprehensive. But, once again, we need to see the details.

Robert Chuang · Answer

I believe majority of the agent would start saying that the assignment agreement has to be present along with the RPA, especially with the indication of who assignee is. Now, the contract is giving seller the power to not approve the assignment agreement by simply not signing the document, then the wholesaler will have to take on the responsibility of performing the deal. Therefore, it is strongly encouraged (by the agents) to have the assignment document to sign while executing the RPA.

One good way to around this, is that just put "To be determined" with the 1c (assignees name). But as it stated in the form, it does not release buyer from any responsibility during the transaction once it has been assigned.

I think they are trying to get rid of wholesalers by implementing the contract into CAR form, and to scare off the wholesalers because now they have the responsibilities after the assignment.

But then again, CAR forms are just a guideline for everyone to use. Nobody has to use CAR forms to do any transaction, but it is encouraged  to use.

What is your thought of this @Matt Skinner ? Since I know you do some wholesales and mainly development.

@Karen Margrave  I believe this form will be helpful from times to times, but it also add complexity and could be problematic. I am thinking that what if one day a wholesaler get into the contract and the seller does not sign the assignment agreement?

Karen Margrave · Answer

@Matt Skinner That's interesting.  I've never assigned a contract myself, but as an agent I know in the past people would just put the buyers name or asignee, then that kind of fell out of favor. I know in a deal we did a few months back it would have been helpful, as the buyer changed from his personal name to his IRA, and we had to write a new offer, had he been able to assign it, it would have been easier and made sellers less anxious.

California standard forms to add ASSIGNMENT clause?

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