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Steve roll Northern California broker for Alice and James estates and hopes I want to talk to you today about the subject of how to properly add remove or replace a buyer in a previously executed California residential purchase agreement there's times that this needs to happen sometimes it happens that before the end of a transaction where one person needs to be added to the contract sometimes for credit reasons sometimes for personal reasons sometimes we have to remove somebody from the contract for the same thing either personal or credit on our very rare occasion we have one buyer needing to step out of their responsibilities and be replaced by another in the old days we used to write John Smith or assignee on our contracts and I want to help you understand that that's not a proper way to accomplish it there is no unilateral right for this contract to be assigned it does require consent of the seller and it is not just a general consent that anybody can accept become an assignee on the contract but the seller needs to be able to approve a specific assignee we'll see that as we go ahead today so the idea of simply doing an addendum that John Smith is added to the contract as a buyer that needs to go away and we need to follow the directions of the CA our residential purchase agreement and each of the residential contracts and the forms that are the CA our legal team and forms committee have provided for us to be able to meet the needs of all of our clients in these situations so let's take a look first of all at the assignment paragraph that's in each of these purchase agreements it's on paragraph 26 of the RP a but each of the other residential purchase agreements and contain the exact same language and it simply says buyers shall not assign all or any part of buyers interest in this agreement without first having obtained the separate written consent of seller to a specified assignee such consent shall not be unreasonably withheld any total or partial assignment shall not relieve buyer of buyers obligations pursuant to this agreement unless otherwise agreed in writing by the seller so there are several pieces to this assignment agreement that need to be fulfilled there's who is the buyer who is the one who is providing the assignment who is receiving the assignment what is the remaining obligation of the one who is the buyer that is going off of this contract what are the rights of the seller in the transaction that's going on so let's take a look at some of these pieces individually here's the assignment of agreement form form AOA and it lays out for us first of all to decide are we dealing with the partial assignment where we're adding a buyer to the contract or are we dealing with the total assignment where we have a replacing buyer or we're taking a buyer off of this contract and then it goes on to talk about the responsibilities of the assignee and what needs to take place in order for this assignment to be completed what are the continued obligations of the one being removed from the contract and we need to have the specific sellers consent that's going on so that's form a Oh a a let's take a little bit more detail is this a parcel assignment or a subtotal assignment and the contract lays out we have to choose which way we're going and is a part part of interest that's being transferred or is it the complete interest that's being transferred let me share it with some scenarios that help to illustrate this scenario number one the buyer on the agreement as it was written as John Doe but somewhere before you know after the execution of the contract and before closing it's decided to add his spouse Jane Doe on to this contract as a buyer so in this case the buyer who is doing the assigning is John Doe the assignee the one who is receiving interest in the contract is Jane Doe and it is a parcel assignment because John's not giving up all of his rights in this contract he's only giving up a proportionate right of his contract so 50 percent of his interest in the agreement and his responsibility and agreement is being passed to Jane so now both of them have percent interest in the contract under the second scene John and Jane are both part of the original contract but for some reason whether it's a credit issue personal issue it's decided that John needs to be removed as a buyer from this contract so in this case the buyer for the assignment of agreement is John even though he's leaving his position as a buyer on this contract he is the buyer doing the assigning on this country on this form Jane is even though she's already on the contract as a buyer she's the assignee because she's the one that's receiving added interest in this contract and so the assignment type is going to be a total assignment because John now is assigning 100 percent of his interest in this contract over to Jane so when this is completed and it's ratified John will have zero interest in the contract Jane will have 100 percent interest in this contract under the third scene we have Jane on this contract Jane Doe but first one reason whether she is not able to fulfill her responsibilities on this contract and so si is assigning completely her interest in this contract to Jane Smith so Jane Doe even though she's leaving the contract as a buyer for the purposes of the assignment of agreement she is the buyer the assignee is Jane Smith the assignment is total because Jane Doe is assigning 100 percent of our interest over to Jane Smith what does the assignee agree to do they're the ones receiving interest in the contract what are their obligations what are their responsibilities as they enter onto this contract as a buyer well first of all very important the assignee represents for the benefit of the seller remember the sellers rights have to be protected here that the assignee ratifies and approves as assignees own ex all prior approvals and acts of buyer pursuant to the agreement so in other words the seller doesn't have to start all over again does not have to start the process of disclosure and and providing all the documentation and wait for a new period of review or a new contingency period this buyer is saying I accept everything that the previous buyers have done in the role of buyer on this contract and I accept them as if they were my own actions and then divide the assignee agrees that from this point on whether it's as with Arsenal interest in the contract or total interest in the contract that this assignee will continue to fulfill their obligations and responsibilities of a buyer on this contract what do we do with the documents that have already been signed there's a lot of paperwork I've shared with people that we kill more trees selling houses than we use to build them but these are important pieces so in this assignment of agreement addendum this buyer coming on to the contract this assignee is acknowledging first of all that they have already seen they've been provided all of the documents the contract documents the disclosure documents the advisories the escrow paperwork anything that's been provided to the buyer of this contract this new added buyer says we have seen them we have reviewed them and were they have either already initialed and signed all those documents and if that's the case this box can be marked or they agreed that within three days they will assign an initial all of the previously ratified documents and deliver those to the seller is that so important well remember this fire is being added to the contract they now have not only the obligations and responsibilities of a buyer but they also have all of the rights and the recourse of a buyer in this contract and we don't want a situation where six months or a year from now if there's a legal action now taking place between the buyer and the seller or between the buyer and the broker we don't want to have a claim that this buyer was not treated right they were not given full disclosure they were not provided the information necessary to make reasonable decisions all of the things that were required to be given to a buyer have to be given acknowledged by this new buyer on the contract one of the most important pieces of this assignment of agreement and this one that just doesn't get covered when we do a simple addendum saying John Smith is added to the contract and that is the realization that John Smith even though he may be leaving this contract and completely assigning it to another buyer he is not relieved of his duties and his obligations and responsibilities regarding the fulfilment of this contract if the new buyer fails to fulfill the contract if they breach this contract the seller may have legal recourse against that original buyer for the fulfillment of their responsibilities in this contract and that's spelled out fire acknowledges and agrees the buyer is not released from any obligations or covenants under the agreement and that's a very important protection for the seller and it's very important that both at the buyers understand that the final piece we have down here in paragraph 8 is the sellers consent remember the contract says assignment cannot be made without the sellers written consent so this assignment of agreement addendum is a way to provide that and again it emphasizes the buyer is not relieved of their obligations or covenants under the agreement but the seller consents to the foregoing assignment so that's an important piece one final piece on this one is that if the especially in a place where the buyers being replaced on the contract if that buyer has received any monetary compensation or any compensation at all for the giving this contract over to this new fire that is something that has to be disclosed in writing to the seller so let's wrap it up why is it so important to follow the proper steps and use the assignment of agreement addendum and yes sometimes it's a hassle to have that new buyer go back inside and initial all of the documents well it provides a standard and legally reviewed method for accomplishing the goal the goal is adding removing or replacing a buyer and it's a way to do it properly it's way to do it with the right legal protections it provides legal guidance regarding the rights the duties and the obligations of the buyer who's being added to the contract but it also provides clarity regarding the ongoing legal liability of the buyer that's stepping out off or being removed from the contract and then finally it provides legal protection of the sellers rights and maintains the seller security in this agreement so there's times when this needs to take place there's times when we need to add someone we need to remove someone and on a very rare occasion they need to be replaced that's the CA our legal team has provided us documentation to be able to accomplish this the contract itself gives us guidance as to what needs to take place and I hope that you will be careful to take those extra steps and to do this properly when the time comes and do your role as a as an agent and it's a judiciary in the best way possible I hope this has been helpful we'll talk to you again soon