Unassignable contract...Was this legal?

Question

So here's a scenario for y'all. I did a dumb thing and didn't use a lawyer on a sale, and because I was too busy it came back to bite me.
I sold a property as a cash deal on a standard Indiana real estate contract. Everything was pretty normal. The person who bought it didn't seem to have any intention of wholesaling it (so I thought). We get close to closing and she tells the title company that she is going to assign the contract to someone else. The title company says they've never really done a transaction like that, but she sent over the assignment signed by her and the end buyer. The title company calls my agent and tells him that she plans to assign the contract at closing. He doesn't understand that means there is a fee and terms to that and thinks she just didn't want it, but found someone who did at the same price =) (I've since explained to him the real intention of assigning a contract.) So he tells the title company that as long as what they are doing is legal he doesn't believe I will have a problem with it (and I wouldn't have).
The closing comes and we sign the few closing documents with the end buyers name on them. I paid no attention to the name or questioned who it was. Then I find out through some research that it is a company owned by someone I know. 
The point is, I called the title company to ask how she was able to assign the contract without my approval. My agent nor I never saw the Assignment paper because they never disclosed it to my agent. The title company now is putting responsibility on my agent because it's "part of the contract" and they don't deal with that. The contract never stated "or assigns" either.

In this scenario, is there any recourse?

Steve Babiak · Answer

They attach their addendum, wherein it will be written that the contract is not assignable.  Therefore, since the terms of the addendum apply, you cannot assign that bank's contract.  If it's not anywhere in the addendum, then an assignment isn't totally out of the question; I have read posts where people have claimed to have assigned REO purchase contracts.

J Scott · Answer

To answer the specific question asked above, NO, you don't have the right or the responsibility to accept or deny the assignment.

Based on the contract and/or contract law in your state, the contract was either assignable or not assignable.  If it was assignable, your approval wasn't needed.  If it wasn't assignable, your approval wouldn't have helped (unless you amended the contract).

So, no, there was absolutely no reason to get your approval.  Though it was the closing attorney's responsibility to ensure that the contract was being legally upheld.

Rob Gillespie · Answer

Ryan, 
In Ohio, contracts are assignable unless specified otherwise. I understand that you feel your agent deserves more, but it is really not up to you to count everyone's profit. If you entered into this deal happy with what you were making, then  that should be the only thing you worry about.
I say this with respect, sometimes when reading something, it does not come across as well as tellin it to you verbally. So please do not take it the wrong way.

Jimmy C. · Answer

Thats probably the same here Will.  I just never read the addendum's.

Jimmy C. · Answer

Down here the broker for the bank just makes sure the box "may not assign" is checked.

Does Illinois not cover assign ability in their state contract?

Bill Gulley · Answer

Not that anyone is listening, LOL, but the bank isn't really saying that their borrower can't get an assigned contract either, but they can say they don't loan on them. When banks are selling as the OP did, they do stated and add the restriction.

Will Barnard · Answer

As to claims that others have assigned a bank contract, it is not just a claim. I actually had two contracts with bank addendums that did not have language in the addendum stating that the contract was not assignable. Although I did not excersie such right to assign, it was a legal option for me. In these two cases, the PSA was marked that the contract was assignable and the bank just missed it, plus did not have the no assignment clause in their addendums (an oversight on their part). This is of course rare, and today, probably non-existent as bank addendums are getting even worse now. I plan to post about some new verbiage I refuse to agree to.

Ryan ODonnell · Answer

Ok...most of what you're saying I understand as true. Keep in mind though that the bank will not allow you to assign a contract and I've done deals where they don't state that you CAN'T and it's not specified either way.
So how can a bank deny an assignment on a contract that doesn't state that it can't be?
I'm more inclined to try wholesaling after this because as long as it doesn't say I can't assign it then I don't have to disclose any part of the assignment to the seller. I see why it's such a controversial practice. 
No, I don't think my agent deserved more. He should have worked harder to find the right price. Don't get me too wrong, I'm not upset so much as using my mistakes and how this went down to learn and educate the people in my business that I think deserve to know that this can happen. I'm not a "newbie" so to speak but this was my first actual experience with a wholesale so the dots in the "strategy" of wholesaling just got connected. See, you can learn how the strategy works, but when you live it, it can be different and you can end up with questions. Also proof that no education, no matter how good, can make for a perfect experience.

Thank god for BP!
THANKS EVERYONE!

Jimmy C. · Answer

In florida we have an assignability section in the state contract. Here it would depend on which box was checked on the contract. Your agent shoild be familiar with the contract and reviewed that section if it also exists on your state approved contract.

Unassignable contract...Was this legal?

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