I had a situation come up and wanted to clarify the issue about assigning contracts in Texas.
SCENARIO: I had a buyer back out of a contract two days before close, so we found another investor to assign the deal to. We closed with the assignment, but the seller was upset and didn’t want to “accept the assignment”. We talked to a ton of lawyers and here is the clarification:
- YES. Almost all Texas contracts are assignable.
- NO. You do not have to write “and/or assigns” next to your name.
- BUT, the seller does not have to accept the assignment if you have not specifically made the contract assignable by writing the language into the contract.
In our case, the seller was not in default since they did not accept our assignment, but the strange thing was that neither was the buyer. They’d have to settle it in court. The original buyer decided to end things and just lose his earnest money.
So, the bottom line is that it’s best to just put and/or assigns unless you want to be at a standstill. I think most investors do this anyway, but there’s always been a lot of questions around whether it’s “required”. The answer is no, it’s not required, but you can be in a bad situation should the seller simply not sign off on the paperwork at the closing.