What It Means When You Take Over Someone Else’s Contract

Some buyers come across properties being sold by a wholesaler rather than directly by the owner. In these situations, you may be purchasing a property through what is often called a wholesale deal or an assignment of contract. This means you may be taking over someone else’s contract to buy the property.

This guide explains what that means and what to keep in mind before moving forward.

What Does “Assignment” Mean for You?

In an assignment, you are not negotiating and signing a contract to buy the property directly from the legal owner.  Instead, you are stepping into a contract that a wholesaler has already signed with the owner. 

This means you may be:

• Taking over that person’s contract to buy the property
• Stepping into their place as the buyer
• Agreeing to the same price, terms, and deadlines they negotiated with the seller

The wholesaler you are working with is selling you the right to buy the property, not the property itself. Before moving forward, it’s important to understand who currently owns the property and who you will ultimately purchase it from.

How These Deals Usually Work

Most assignment deals follow a similar pattern:

• A wholesaler assigns a contract with the property owner.
• The contract allows the wholesaler to transfer their interest in the property.
• The person you are purchasing the contract from may never be the owner of the property.
• You agree to take over the wholesaler’s interest in the property.
• You complete the purchase with the original seller.
• You pay the wholesaler a fee for assigning the contract.

What You’re Actually Paying For

In many cases, your purchase price includes:

• The price the wholesaler agreed to pay the seller
• An additional fee paid to the wholesaler (often called an assignment fee)

This means the total price you pay may be higher than what the wholesaler originally negotiated with the legal owner.

Why Some Buyers Consider These Deals

For some buyers, these transactions may offer:

• Access to properties that are not publicly listed
• Opportunities to purchase investment or renovation properties
• Faster transactions in some situations

What to Keep in Mind Before You Move Forward

Before moving forward, it’s important to understand:

• You may be paying more than the wholesaler’s original contract price
• The property is often sold “as-is”
• You may have limited ability to negotiate terms
• Property information and disclosures may be limited
• Assignment fees usually cannot be financed, and many lenders will not lend money, so cash is often required
• The timeline may be shorter than a traditional transaction
• The wholesaler is not your real estate agent and owes you no fiduciary duty.

A Few Things to Watch For

Take a closer look if:

• It’s not clear who currently owns the property
• You’re not given time to review the contract
• The assignment fee is not clearly explained
• You are asked to move forward without inspections
• The seller and wholesaler roles are unclear
• Key details of the deal change along the way

Taking time to review the details can help you avoid surprises later.

Questions to Ask Before You Move Forward

Before moving forward, you may want to ask:

• Who currently owns the property?
• What is the original contract price?
• How much is the assignment fee?
• Can I review the original purchase agreement?
• Are inspections allowed?
• What condition is the property in?
• Are there any known issues with title or liens?
• Does the original contract permit assignment and is still valid?
• Where is the deposit held and is it refundable?

These questions can help you better understand what you’re agreeing to purchase.

Before You Sign, Consider Getting Professional Advice

Buying property through an assignment involves legally binding contracts and financial risk.

Before you sign:

• Consider speaking with a real estate attorney
• Work with a licensed real estate professional
• Arrange for a home inspection if possible
• Review comparable sales to understand pricing

In Rhode Island, real estate closings are typically handled by attorneys. An attorney can help you review the assignment agreement, explain your rights and obligations, and identify potential issues before closing.

What to Keep in Mind

When you purchase through an assignment, you are stepping into an existing contract and paying for the right to complete that deal.

Under Rhode Island law, in an assignment, the property owner still must give you the RI Real Estate Disclosure Form and lead paint records, and you as the buyer should insist on receiving them.

Understanding the price, the terms, and the condition of the property can help you make a more confident decision.

For more information, please contact the RIAR Legal Department at [email protected].