Wholesale Assignment Contracts: Legal Essentials

A wholesale assignment contract transfers your rights and obligations under a purchase agreement to an end buyer. It's a legal document that, when structured properly, protects all parties and ensures a smooth transaction.

The foundation is your original purchase contract with the seller. This contract must include an assignment clause — language that explicitly allows you to assign your interest to another party. Common language reads: 'Buyer shall have the right to assign this contract to any person or entity prior to closing without the consent of the seller.'

The assignment agreement itself is a separate document between you (the assignor) and the end buyer (the assignee). Key elements include identification of the original purchase contract, the assignment fee amount, payment terms for the assignment fee (typically due at closing), the assignee's acknowledgment of the original contract terms, and any conditions or contingencies.

Deposit handling varies by deal structure. In some cases, the end buyer replaces your earnest money deposit with their own (larger) deposit. In others, your deposit remains in escrow and the assignment fee is paid separately at closing.

Double closings are an alternative to assignments. Instead of assigning the contract, you close on the purchase (A-B transaction) and immediately resell to the end buyer (B-C transaction). This requires transactional funding (short-term money used for same-day closes) but keeps your profit private and avoids assignment clause issues.

Legal requirements vary significantly by state. Some states require wholesalers to hold a real estate license, others restrict marketing of properties you don't own, and disclosure requirements differ. Work with a real estate attorney who understands wholesale transactions in your specific state before your first deal.