An assignment of an option occurs when a person transfers their rights or property to another individual or business. This process involves a legal document received by an option writer, indicating that the option sold has been exercised by the purchaser.
Purpose of Assignment of Option to Purchase
The primary purpose of an assignment of an option to purchase is to transfer and assign interest as a tenant in and to the option. This allows both the assignor and assignee to agree on specific terms, ensuring that no officer, director, equity owner, employee, or representative of either party will have any personal liability under the assignment.
Rights and Obligations in Option Contracts
Like many option contracts, the purchaser’s assignment of option contracts provides the purchaser with the right, but not the obligation, to buy the property. However, the property owner who signs the contract is legally bound to sell the property according to the terms specified in the option contract. If the owner fails to comply, they may face a lawsuit compelling them to sell the property. Therefore, property owners should only sign option contracts if they genuinely intend to sell and are willing to adhere to the contract’s terms.
Free Assignment PDF Form
We offer a free Assignment PDF form to help you prepare your own Assignment Notice to the concerned authorities.
Here is the download link for this Purchaser Assignment of Option Notice,
Benefits for the Purchaser
The purchaser’s assignment of an option contract grants the purchaser ample time to make safe investments, explore property development options, address potential issues, and attract partners. This contract enables potential purchasers to use a small amount of money for a potentially significant gain. However, purchasers should be cautious about not overpaying for the option fee. If a purchaser chooses not to exercise the option, they typically forfeit the entire option fee.
Benefits for the Property Owner
For property owners, the option contract is beneficial because they receive the option fee from the potential purchaser. Many option contracts allow property owners to retain the option fee if the purchaser does not exercise their purchase option. In such cases, the owner can sell the property to someone else while keeping the option fee. However, the drawback for property owners is that they may miss other transaction opportunities while the property is under option, potentially forfeiting larger profits.
Importance of the Assignment of Option
Despite some disadvantages for both property/business owners and potential purchasers, the assignment of options is a crucial legal document for buying or selling property or businesses. It facilitates clear terms and protections for both parties, ensuring a fair and legally binding transaction.
