Legal Question in Real Estate Law in New Jersey

Re: assignment of contract legal in NJ ?

what you are describing is perfectly fine. the contract must not have prohibition against assignment.

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Re: assignment of contract legal in NJ ?

Yes, it is legal however, unless you are a licensed real estate broker or a lawyer, it is probably not legal for you to charge a fee for your services.

If you are not earning through ownership (buy low, sell high), then you are necessarily earning it through your services. The services of connecting a buyer and seller meet the classic definition of real property brokerage. New Jersey requires a license to charge a fee for brokerage even for a purely private transaction. If you are earning your money by facilitating the transaction by giving advice, drawing documents, etc., then you are engaged in the practice of law and must be admitted to the bar. Either way, a license is required.

Don't fret though. It is not impossible to obtain a broker's license. Start with the New Jersey web site.

Re: assignment of contract legal in NJ ?

The two previous responses you received were correct but I would like to add some clarification.

Contracts for Sale of Real Estate almost always contain a clause prohibiting assignment so, as noted in prior response, be sure either that there isn't one in your contracts or negotiate with the Seller to have it removed.

You must also be aware however, that you can only assign "rights." "Obligations" must be assumed. If you assign a Contract for Sale and the person you assigned it to defaults, YOU are still responsible to the Seller. So you need to have an agreement that states you are assigning all your right and the other party is assuming all of your obligations. You MUST also obtain the Seller's consent. He may be willing to allow you to assign your rights to whomever you want but unless he agrees to the asumption and to release you personally from the Contract, again, you could be responsible if the person you assigned it to defaults.

Finally, if, for examle, your contract for sale says you are to pay $200,000.00, the way you make money is to find some to purchase an assignment of your contract for $220,000.00 because, let's say, they think the property is worth $250,000.00. How do you get paid? The Seller cannot receive the entire $250,000.00 and then give you a check for $30,000.00 nor can you just show up at the closing and receive a check in that amount without explaining why you are getting that money.

Under various provisions and most notably, the Real Estate Settelement Procedures Act (RESPA) the HUD-1 Settlement Statement which itemizes all monies received and paid, every disbusresment must be for a permitted reason. The way that you propose would also, in almost if not every state be illegally acting as a real estate broker or agent.

To accomplish your objective, at the same table there must be 2 separate closings; the first one from the Seller to you and the second in which you deed the property to your Assignee. I know that there are additional transaction costs incurred in doing it this way but no title insurance company or repuatble attorney I know would cooperate with your original plan and even if they did the civil penalties if caught (which is very likely to happen) are severe and without reviewing the statute I cannot say for sure about this ransaction but there are also CRIMINAL penalties imposed for some violations of RESPA and also perhaps under your state law.

Consult with an experienced real estate attorney and get the full advice you need and the forms which you can reproduce and use over and over again in subsequent transactions.

Re: assignment of contract legal in NJ ?

I think Dale has clairified the issue. I use as an example new construction where you may be eligible for a low price because you are one of the first purchasers. During construction the price increases so you have a built-in profit if you were to sell before closing. Many developers do not allow their properties to be flipped and require the original purchaser to actually close. In those cases, I schedule simultaneous or successive closings; you close with the developer and then close with your buyer.