what is an assignment of recognition agreement

B4-2.3-03, Legal Requirements for Co-op Projects (09/04/2018)

Amendments to documents, co-op membership, lien position for co-op share loans, prior co-op financing, assignment of co-op’s lease/occupancy rights, co-op corporation’s recognition agreement, responsibilities, and lender’s rights, lender’s rights.

The co-op project’s documents must provide for the tenant-stockholders to have the right to amend them. In addition, the co-op corporation must be legally bound to notify the holder of a co-op share loan about any proposed material changes to the co-op project with respect to allocation of membership interests, voting rights, insurance coverages, and any other provisions that are for the express benefit of the lender.

The project documents must require that the sale or transfer of stock, shares, or membership certificates in the co-op corporation be in compliance with federal and state security disclosure laws. The documents also must require tenant-stockholders to own stock, shares, or a membership certificate, and permit the stock, shares, or membership certificates in the co-op corporation to be pledged and registered.

The project documents must give the tenant-stockholder a right to occupy the unit for a period that extends at least to the maturity date of the share loan, although this right should be subject to the terms and conditions of a proprietary lease or occupancy agreement between the tenant-stockholder and the co-op corporation. The documents also must prohibit the co-op corporation from imposing unreasonable limitations on the tenant-stockholder’s ability to sell, transfer, or convey their membership, or to sublease their unit. If the purchaser’s right to membership or occupancy is subject to any right of the co-op corporation to give approval, the lender must furnish evidence to clearly show that such approval has been given before Fannie Mae will purchase or securitize the co-op share loan.

The share loan must be secured by the assignment (in pledge or trust) of the borrower’s leasehold estate; a pledge or trust of the corporation stock, shares, or membership certificate; and any other documents that are appropriate under individual state or local laws and practices.

The lender that is financing the share loan must receive an assignment of the proprietary lease, occupancy agreement, or other similar evidence of the right to occupy the unit for all share loans that it delivers to Fannie Mae. The lender must also obtain a stock power, assignment, or other similar document that authorizes the lender to transfer ownership interest in the event of a default. Valid financing statements and assignments of financing statements must be executed and filed, if necessary to perfect Fannie Mae’s security interest under the Uniform Commercial Code of the state in which the property is located. Information searches or equivalent evidence of filing financing statements and assignments of financing statements must be obtained and must show that the Fannie Mae co-op share loan is in first-lien position. In those states in which co-op units are considered real property, perfection of the lien must comply with state law applicable to real estate.

The share loan must be a first-lien, except that, where custom dictates to the contrary, Fannie Mae will permit its lien to be subordinate to the co-op corporation’s lien against the tenant-stockholder’s shares for unpaid assessments that represents the pro rata share of the corporation’s payments for the blanket mortgage, current year’s real estate taxes, operating expenses or maintenance fees, and special assessments.

Note: The pro rata share of the project debt that is related to the co-op share loan cannot exceed 35% of the sum of the related pro rata share of the project debt and the appraised equity interest value of the shares. Lenders may use a higher ratio (not to exceed 40%) when there are fully documented compensating factors that justify using the higher ratio.

Fannie Mae will also permit its lien to be subordinate to any assignment of rents or maintenance expenses in any mortgage or deed of trust that is secured by the co-op project, or any Regulatory Agreement entered into by the co-op corporation and the Secretary of HUD as a condition for obtaining HUD mortgage insurance.

The co-op project must be in compliance with the requirements imposed by the holder of any prior financing for the project. If the blanket mortgage on a project includes a due-on-encumbrance clause and the project is located in a state in which share loans are considered to be an encumbrance on the project, the blanket lender must consent to the share loan financing. In the case of a conversion of an existing building, the blanket lender must agree to the use of the building as a co-op and, if it is feasible, agree—in the event of a default on the blanket mortgage—not to wipe out the shares of those tenant-stockholders who are current in the payment of their assessments or carrying charges.

Generally, the project documents should not permit the co-op corporation to restrict the sale, conveyance, or transfer of a unit owned by a lender, its successors, or assigns, nor to place any limits on the assignment of the proprietary lease or occupancy agreement to the lender, its successors, or assigns. This lease or agreement must be assumable by the lender if the tenant-stockholder defaults on the share loan. If the co-op’s organizational documents require that a tenant-stockholder be a natural person, they must permit the lender to select a non-corporate designee for any assignment of a proprietary lease or occupancy agreement that it acquires through foreclosure or acceptance of a deed in lieu of foreclosure. If the lender assumes the lease or agreement as the result of the tenant-stockholder’s default, the co-op corporation must allow the lender to attempt to sell its interest in the lease or agreement. However, if the lender is unable to effect a satisfactory sale within 60 days—either through its own efforts or with assistance from the co-op corporation—the co-op corporation may not prohibit the lender from subletting the unit.

The project documents may grant the co-op corporation the right to approve a lender’s sublessee or to offer an alternate sublessee that is satisfactory to the lender. However, the co-op corporation’s approval standards and procedures may not be unreasonably restrictive or in violation of applicable law, and the action must be completed within a reasonable time after the lender requests approval of a proposed sublessee.

The project documents must either require the co-op corporation to execute a separate agreement—such as a recognition agreement—or include provisions to recognize specific rights of the lender that finances the share loan (or those of its successors or assigns) and the co-op corporation’s responsibilities to that lender.

Co-op Corporation’s Responsibilities

The recognition agreement (or the project’s legal documents) must include, among other things, the following responsibilities for the co-op corporation:

The co-op corporation must evict a tenant-stockholder who has defaulted on their share loan and must terminate that tenant-stockholder’s lease, if the share loan holder requests it to do so.

The co-op corporation must be legally bound to notify the lender of any of the following changes or occurrences:

any threatened or actual condemnation, eminent domain proceeding or acquisition, or any actual loss, whether or not covered by insurance, that affects any portion of the co-op project or unit;

failure to maintain compliance with co-operative corporation eligibility under IRS Code Section 216;

any 30-day delinquency by the co-op corporation in payments due under any blanket mortgage for real estate taxes, assessments, and charges imposed by a government entity or public utility, or under any ground lease;

any lapse or cancellation of any insurance coverages maintained by the co-op project;

any proposed action that requires the consent of a specified percentage of eligible share loan holders; and

any 90-day delinquency by the tenant-stockholder that is related to the payment of their monthly assessments or carrying charges.

The project documents must grant the lender financing a share loan the right to cure the tenant-stockholder’s defaults in their assessment payments or carrying charges and the right to review and approve the following actions before the co-op corporation can consent to them:

any surrender, cancellation, modification, or assignment of any documents evidencing ownership, possession, and use of a unit;

any sublease of a unit;

any further or additional pledge or mortgage of any documents evidencing ownership, possession, and use of a unit;

any action to change the form of ownership of the project; or

the contraction, expansion, or termination of the co-op project.

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Originating & Underwriting

Selling Guide

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(Published: May 01 2024)

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• Copyright and Preface
• A1-1-01, Application and Approval of Seller/Servicer
• A2-1-01, Contractual Obligations for Sellers/Servicers
• A2-1-02, Nature of Mortgage Transaction
• A2-1-03, Indemnification for Losses
• A2-2-01, Representations and Warranties Overview
• A2-2-02, Delivery Information and Delivery-Option Specific Representations and Warranties
• A2-2-03, Document Warranties
• A2-2-04, Limited Waiver and Enforcement Relief of Representations and Warranties
• A2-2-05, Invalidation of Limited Waiver of Representations and Warranties
• A2-2-06, Representations and Warranties on Property Value
• A2-2-07, Life-of-Loan Representations and Warranties
• A2-3.1-01, Lender Breach of Contract
• A2-3.1-02, Sanctions, Suspensions, and Terminations
• A2-3.2-01, Loan Repurchases and Make Whole Payments Requested by Fannie Mae
• A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility
• A2-3.2-03, Remedies Framework
• A2-3.3-01, Compensatory Fees
• A2-4.1-01, Establishing Loan Files
• A2-4.1-02, Ownership and Retention of Loan Files and Records
• A2-4.1-03, Electronic Records, Signatures, and Transactions
• A2-4.1-04, Notarization Standards
• A2-5-01, Fannie Mae Trade Name and Trademarks
• A3-1-01, Fannie Mae’s Technology Products
• A3-2-01, Compliance With Laws
• A3-2-02, Responsible Lending Practices
• A3-3-01, Outsourcing of Mortgage Processing and Third-Party Originations
• A3-3-02, Concurrent Servicing Transfers
• A3-3-03, Other Servicing Arrangements
• A3-3-04, Document Custodians
• A3-3-05, Custody of Mortgage Documents
• A3-4-01, Confidentiality of Information
• A3-4-02, Data Quality and Integrity
• A3-4-03, Preventing, Detecting, and Reporting Mortgage Fraud
• A3-5-01, Fidelity Bond and Errors and Omissions Coverage Provisions
• A3-5-02, Fidelity Bond Policy Requirements
• A3-5-03, Errors and Omissions Policy Requirements
• A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events
• A4-1-01, Maintaining Seller/Servicer Eligibility
• A4-1-02, Submission of Financial Statements and Reports
• A4-1-03, Report of Changes in the Seller/Servicer’s Organization
• A4-1-04, Submission of Irrevocable Limited Powers of Attorney
• B1-1-01, Contents of the Application Package
• B1-1-02, Blanket Authorization Form
• B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns
• B2-1.1-01, Occupancy Types
• B2-1.2-01, Loan-to-Value (LTV) Ratios
• B2-1.2-02, Combined Loan-to-Value (CLTV) Ratios
• B2-1.2-03, Home Equity Combined Loan-to-Value (HCLTV) Ratios
• B2-1.2-04, Subordinate Financing
• B2-1.3-01, Purchase Transactions
• B2-1.3-02, Limited Cash-Out Refinance Transactions
• B2-1.3-03, Cash-Out Refinance Transactions
• B2-1.3-04, Prohibited Refinancing Practices
• B2-1.3-05, Payoff of Installment Land Contract Requirements
• B2-1.4-01, Fixed-Rate Loans
• B2-1.4-02, Adjustable-Rate Mortgages (ARMs)
• B2-1.4-03, Convertible ARMs
• B2-1.4-04, Temporary Interest Rate Buydowns
• B2-1.5-01, Loan Limits
• B2-1.5-02, Loan Eligibility
• B2-1.5-03, Legal Requirements
• B2-1.5-04, Escrow Accounts
• B2-1.5-05, Principal Curtailments
• B2-2-01, General Borrower Eligibility Requirements
• B2-2-02, Non–U.S. Citizen Borrower Eligibility Requirements
• B2-2-03, Multiple Financed Properties for the Same Borrower
• B2-2-04, Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction
• B2-2-05, Inter Vivos Revocable Trusts
• B2-2-06, Homeownership Education and Housing Counseling
• B2-2-07, First-Generation Homebuyer Loans
• B2-3-01, General Property Eligibility
• B2-3-02, Special Property Eligibility and Underwriting Considerations: Factory-Built Housing
• B2-3-03, Special Property Eligibility and Underwriting Considerations: Leasehold Estates
• B2-3-04, Special Property Eligibility Considerations
• B2-3-05, Properties Affected by a Disaster
• B3-1-01, Comprehensive Risk Assessment
• B3-2-01, General Information on DU
• B3-2-02, DU Validation Service
• B3-2-03, Risk Factors Evaluated by DU
• B3-2-04, DU Documentation Requirements
• B3-2-05, Approve/Eligible Recommendations
• B3-2-06, Approve/Ineligible Recommendations
• B3-2-07, Refer with Caution Recommendations
• B3-2-08, Out of Scope Recommendations
• B3-2-09, Erroneous Credit Report Data
• B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report
• B3-2-11, DU Underwriting Findings Report
• B3-3.1-01, General Income Information
• B3-3.1-02, Standards for Employment Documentation
• B3-3.1-03, Base Pay (Salary or Hourly), Bonus, and Overtime Income
• B3-3.1-04, Commission Income
• B3-3.1-05, Secondary Employment Income (Second Job and Multiple Jobs) and Seasonal Income
• B3-3.1-06, Requirements and Uses of IRS IVES Request for Transcript of Tax Return Form 4506-C
• B3-3.1-07, Verbal Verification of Employment
• B3-3.1-08, Rental Income
• B3-3.1-09, Other Sources of Income
• B3-3.1-10, Income Calculator
• B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower
• B3-3.2-02, Business Structures
• B3-3.2-03, IRS Forms Quick Reference
• B3-3.3-01, General Information on Analyzing Individual Tax Returns
• B3-3.3-02, Income Reported on IRS Form 1040
• B3-3.3-03, Income or Loss Reported on IRS Form 1040, Schedule C
• B3-3.3-04, Income or Loss Reported on IRS Form 1040, Schedule D
• B3-3.3-05, Income or Loss Reported on IRS Form 1040, Schedule E
• B3-3.3-06, Income or Loss Reported on IRS Form 1040, Schedule F
• B3-3.3-07, Income or Loss Reported on IRS Form 1065 or IRS Form 1120S, Schedule K-1
• B3-3.4-01, Analyzing Partnership Returns for a Partnership or LLC
• B3-3.4-02, Analyzing Returns for an S Corporation
• B3-3.4-03, Analyzing Returns for a Corporation
• B3-3.4-04, Analyzing Profit and Loss Statements
• B3-3.5-01, Income and Employment Documentation for DU
• B3-3.5-02, Income from Rental Property in DU
• B3-4.1-01, Minimum Reserve Requirements
• B3-4.1-02, Interested Party Contributions (IPCs)
• B3-4.1-03, Types of Interested Party Contributions (IPCs)
• B3-4.1-04, Virtual Currency
• B3-4.2-01, Verification of Deposits and Assets
• B3-4.2-02, Depository Accounts
• B3-4.2-03, Individual Development Accounts
• B3-4.2-04, Pooled Savings (Community Savings Funds)
• B3-4.2-05, Foreign Assets
• B3-4.3-01, Stocks, Stock Options, Bonds, and Mutual Funds
• B3-4.3-02, Trust Accounts
• B3-4.3-03, Retirement Accounts
• B3-4.3-04, Personal Gifts
• B3-4.3-05, Gifts of Equity
• B3-4.3-06, Grants and Lender Contributions
• B3-4.3-07, Disaster Relief Grants or Loans
• B3-4.3-08, Employer Assistance
• B3-4.3-09, Earnest Money Deposit
• B3-4.3-10, Anticipated Sales Proceeds
• B3-4.3-11, Trade Equity
• B3-4.3-12, Rent Credit for Option to Purchase
• B3-4.3-13, Sweat Equity
• B3-4.3-14, Bridge/Swing Loans
• B3-4.3-15, Borrowed Funds Secured by an Asset
• B3-4.3-16, Credit Card Financing and Reward Points
• B3-4.3-17, Personal Unsecured Loans
• B3-4.3-18, Sale of Personal Assets
• B3-4.3-19, Cash Value of Life Insurance
• B3-4.3-20, Anticipated Savings and Cash-on-Hand
• B3-4.3-21, Borrower's Earned Real Estate Commission
• B3-4.4-01, DU Asset Verification
• B3-4.4-02, Requirements for Certain Assets in DU
• B3-5.1-01, General Requirements for Credit Scores
• B3-5.1-02, Determining the Credit Score for a Mortgage Loan
• B3-5.2-01, Requirements for Credit Reports
• B3-5.2-02, Types of Credit Reports
• B3-5.2-03, Accuracy of Credit Information in a Credit Report
• B3-5.3-01, Number and Age of Accounts
• B3-5.3-02, Payment History
• B3-5.3-03, Previous Mortgage Payment History
• B3-5.3-04, Inquiries: Recent Attempts to Obtain New Credit
• B3-5.3-05, Credit Utilization
• B3-5.3-06, Authorized Users of Credit
• B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit
• B3-5.3-08, Extenuating Circumstances for Derogatory Credit
• B3-5.3-09, DU Credit Report Analysis
• B3-5.4-01, Eligibility Requirements for Loans with Nontraditional Credit
• B3-5.4-02, Number and Types of Nontraditional Credit References
• B3-5.4-03, Documentation and Assessment of a Nontraditional Credit History
• B3-6-01, General Information on Liabilities
• B3-6-02, Debt-to-Income Ratios
• B3-6-03, Monthly Housing Expense for the Subject Property
• B3-6-04, Qualifying Payment Requirements
• B3-6-05, Monthly Debt Obligations
• B3-6-06, Qualifying Impact of Other Real Estate Owned
• B3-6-07, Debts Paid Off At or Prior to Closing
• B3-6-08, DU: Requirements for Liability Assessment
• B4-1.1-01, Definition of Market Value
• B4-1.1-02, Lender Responsibilities
• B4-1.1-03, Appraiser Selection Criteria
• B4-1.1-04, Unacceptable Appraisal Practices
• B4-1.1-05, Disclosure of Information to Appraisers
• B4-1.1-06, Uniform Appraisal Dataset (UAD) and the Uniform Collateral Data Portal (UCDP)
• B4-1.2-01, Appraisal Report Forms and Exhibits
• B4-1.2-02, Desktop Appraisals
• B4-1.2-03, Hybrid Appraisals
• B4-1.2-04, Appraisal Age and Use Requirements
• B4-1.2-05, Requirements for Verifying Completion and Postponed Improvements
• B4-1.3-01, Review of the Appraisal Report
• B4-1.3-02, Subject and Contract Sections of the Appraisal Report
• B4-1.3-03, Neighborhood Section of the Appraisal Report
• B4-1.3-04, Site Section of the Appraisal Report
• B4-1.3-05, Improvements Section of the Appraisal Report
• B4-1.3-06, Property Condition and Quality of Construction of the Improvements
• B4-1.3-07, Sales Comparison Approach Section of the Appraisal Report
• B4-1.3-08, Comparable Sales
• B4-1.3-09, Adjustments to Comparable Sales
• B4-1.3-10, Cost and Income Approach to Value
• B4-1.3-11, Valuation Analysis and Reconciliation
• B4-1.3-12, Appraisal Quality Matters
• B4-1.4-01, Factory-Built Housing: Manufactured Housing
• B4-1.4-02, Factory-Built Housing: Modular, Prefabricated, Panelized, or Sectional Housing
• B4-1.4-03, Condo Appraisal Requirements
• B4-1.4-04, Co-op Appraisal Requirements
• B4-1.4-05, Leasehold Interests Appraisal Requirements
• B4-1.4-06, Community Land Trust Appraisal Requirements
• B4-1.4-07, Mixed-Use Property Appraisal Requirements
• B4-1.4-08, Environmental Hazards Appraisal Requirements
• B4-1.4-09, Special Assessment or Community Facilities Districts Appraisal Requirements
• B4-1.4-10, Value Acceptance (Appraisal Waiver)
• B4-1.4-11, Value Acceptance + Property Data
• B4-2.1-01, General Information on Project Standards
• B4-2.1-02, Waiver of Project Review
• B4-2.1-03, Ineligible Projects
• B4-2.1-04, Environmental Hazard Assessments
• B4-2.1-05, Unacceptable Environmental Hazards
• B4-2.1-06, Remedial Actions for Environmental Hazard Assessments Below Standards
• B4-2.2-01, Limited Review Process
• B4-2.2-02, Full Review Process
• B4-2.2-03, Full Review: Additional Eligibility Requirements for Units in New and Newly Converted Condo Projects
• B4-2.2-04, Geographic-Specific Condo Project Considerations
• B4-2.2-05, FHA-Approved Condo Review Eligibility
• B4-2.2-06, Project Eligibility Review Service (PERS)
• B4-2.2-07, Projects with Special Considerations and Project Eligibility Waivers
• B4-2.3-01, Eligibility Requirements for Units in PUD Projects
• B4-2.3-02, Co-op Project Eligibility
• B4-2.3-03, Legal Requirements for Co-op Projects
• B4-2.3-04, Loan Eligibility for Co-op Share Loans
• B4-2.3-05, Geographic-Specific Co-op Project Considerations
• B5-1-01, High-Balance Mortgage Loan Eligibility and Underwriting
• B5-1-02, High-Balance Pricing, Mortgage Insurance, Special Feature Codes, and Delivery Limitations
• B5-2-01, Manufactured Housing
• B5-2-02, Manufactured Housing Loan Eligibility
• B5-2-03, Manufactured Housing Underwriting Requirements
• B5-2-04, Manufactured Housing Pricing, Mortgage Insurance, and Loan Delivery Requirements
• B5-2-05, Manufactured Housing Legal Considerations
• B5-3.1-01, Conversion of Construction-to-Permanent Financing: Overview
• B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions
• B5-3.1-03, Conversion of Construction-to-Permanent Financing: Two-Closing Transactions
• B5-3.2-01, HomeStyle Renovation Mortgages
• B5-3.2-02, HomeStyle Renovation Mortgages: Loan and Borrower Eligibility
• B5-3.2-03, HomeStyle Renovation Mortgages: Collateral Considerations
• B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts
• B5-3.2-05, HomeStyle Renovation Mortgages: Completion Certification
• B5-3.2-06, HomeStyle Renovation: Renovation Contract, Renovation Loan Agreement, and Lien Waiver
• B5-3.3-01, HomeStyle Energy for Improvements on Existing Properties
• B5-3.4-01, Property Assessed Clean Energy Loans
• B5-4.1-01, Texas Section 50(a)(6) Loans
• B5-4.1-02, Texas Section 50(a)(6) Loan Eligibility
• B5-4.1-03, Texas Section 50(a)(6) Loan Underwriting, Collateral, and Closing Considerations
• B5-4.1-04, Texas Section 50(a)(6) Loan Delivery and Servicing Considerations
• B5-4.2-01, Native American Conventional Lending Initiative (NACLI)
• B5-4.2-02, Disaster-Related Limited Cash-Out Refinance Flexibilities
• B5-4.2-03, Loans Secured by HomePath Properties
• B5-5.1-01, Community Seconds Loans
• B5-5.1-02, Community Seconds Loan Eligibility
• B5-5.1-03, Community Seconds: Shared Appreciation Transactions
• B5-5.2-01, Loans With Resale Restrictions: General Information
• B5-5.2-02, Loans with Resale Restrictions: Eligibility, Collateral and Delivery Requirements
• B5-5.3-01, Shared Equity Overview
• B5-5.3-02, Shared Equity Transactions: General Requirements
• B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral Requirements
• B5-5.3-04, Massachusetts Resale Restriction Loan Eligibility Requirements
• B5-6-01, HomeReady Mortgage Loan and Borrower Eligibility
• B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements
• B5-6-03, HomeReady Mortgage Loan Pricing, Mortgage Insurance, and Special Feature Codes
• B5-7-01, High LTV Refinance Loan and Borrower Eligibility
• B5-7-02, High LTV Refinance Underwriting, Documentation, and Collateral Requirements for the New Loan
• B5-7-03, High LTV Refinance Alternative Qualification Path
• B5-7-04, High LTV Refinance Representations and Warranties
• B5-7-05, High LTV Refinance Pricing, Mortgage Insurance, and Special Feature Codes
• B6-1-01, General Government Mortgage Loan Requirements
• B6-1-02, Eligible FHA-Insured Mortgage Loans
• B6-1-03, Eligible VA-Guaranteed Mortgages
• B6-1-04, Eligible HUD-Guaranteed Section 184 Mortgages
• B6-1-05, Eligible RD-Guaranteed Mortgages
• B7-1-01, Provision of Mortgage Insurance
• B7-1-02, Mortgage Insurance Coverage Requirements
• B7-1-03, Lender-Purchased Mortgage Insurance
• B7-1-04, Financed Borrower-Purchased Mortgage Insurance
• B7-1-05, Government Mortgage Loan Guaranty or Insurance
• B7-2-01, Provision of Title Insurance
• B7-2-02, Title Insurer Requirements
• B7-2-03, General Title Insurance Coverage
• B7-2-04, Special Title Insurance Coverage Considerations
• B7-2-05, Title Exceptions and Impediments
• B7-2-06, Attorney Title Opinion Letter Requirements
• B7-3-01, General Property Insurance Requirements for All Property Types
• B7-3-02, Property Insurance Requirements for One-to Four-Unit Properties
• B7-3-03, Master Property Insurance Requirements for Project Developments
• B7-3-04, Individual Property Insurance Requirements for a Unit in a Project Development
• B7-3-05, Additional Insurance Requirements
• B7-3-06, Flood Insurance Requirements for All Property Types
• B7-3-07, Evidence of Property Insurance
• B7-3-08, Mortgagee Clause, Named Insured, and Notice of Cancellation Requirements
• B7-4-01, General Liability Insurance Requirements for Project Developments
• B7-4-02, Fidelity/Crime Insurance Requirements for Project Developments
• B8-1-01, Publication of Legal Documents
• B8-2-01, Security Instruments for Conventional Mortgages
• B8-2-02, Special-Purpose Security Instruments
• B8-2-03, Signature Requirements for Security Instruments
• B8-3-01, Notes for Conventional Mortgages
• B8-3-02, Special Note Provisions and Language Requirements
• B8-3-03, Signature Requirements for Notes
• B8-3-04, Note Endorsement
• B8-4-01, Riders and Addenda
• B8-5-01, General Information on Special-Purpose Legal Documents
• B8-5-02, Inter Vivos Revocable Trust Mortgage Documentation and Signature Requirements
• B8-5-03, HomeStyle Renovation Mortgage Documentation Requirements
• B8-5-04, Sample Legal Documents
• B8-5-05, Requirements for Use of a Power of Attorney
• B8-6-01, Authorized Use of Intervening and Blanket Assignments
• B8-7-01, Mortgage Electronic Registration Systems (MERS), Inc.
• B8-8-01, General Information on eMortgages
• B8-8-02, Requirements for Creating, Closing, and Correcting eNotes
• C1-1-01, Execution Options
• C1-2-01, General Information on Delivering Loan Data and Documents
• C1-2-02, Loan Data and Documentation Delivery Requirements
• C1-2-03, Ownership of Mortgage Loans Prior to Purchase or Securitization and Third-Party Security Interests
• C1-2-04, Delivering eMortgages to Fannie Mae
• C1-2-05, Bailee Letters
• C1-3-01, General Information on Remittance Types
• C2-1.1-01, Mandatory Commitment Process
• C2-1.1-02, General Information about Mandatory Commitment Pricing and Fees
• C2-1.1-03, Mandatory Commitment Terms, Amounts, Periods and Other Requirements
• C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs
• C2-1.1-05, Servicing Fees
• C2-1.1-06, Accrued Interest Payments for Regularly Amortizing Mortgages
• C2-1.1-07, Standard ARM and Converted ARM Resale Commitments
• C2-1.2-01, Best Efforts Commitment Process
• C2-1.2-02, Best Efforts Commitment Pricing, Periods, and Fees
• C2-1.2-03, Best Efforts Commitment Terms, Amounts, and Other Requirements
• C2-1.3-01, Servicing Marketplace
• C2-2-01, General Requirements for Good Delivery of Whole Loans
• C2-2-02, Documentation Requirements for Whole Loan Deliveries
• C2-2-03, General Information on Whole Loan Purchasing Policies
• C2-2-04, Timing of Distribution of Whole Loan Purchase Proceeds
• C2-2-05, Whole Loan Purchasing Process
• C2-2-06, Authorization to Transfer Funds
• C2-2-07, Purchase Payee Codes
• C3-1-01, General Information About Fannie Mae’s MBS Program
• C3-1-02, Preparing to Pool Loans into MBS
• C3-2-01, Determining Eligibility for Loans Pooled into MBS
• C3-2-02, Selecting a Servicing Option
• C3-2-03, MBS Remittance Type and Selecting a Remittance Cycle
• C3-2-04, Mandatory MBS Commitments
• C3-3-01, Determining and Remitting Guaranty Fees
• C3-3-02, Accessing Buyup and Buydown Ratios and Calculating Payments or Charges
• C3-3-03, Buying Up and Buying Down the Guaranty Fee for MBS
• C3-4-01, Term-Related Fixed-Rate Mortgage Pooling Parameters
• C3-5-01, Creating Weighted-Average ARM MBS
• C3-5-02, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Fixed MBS Margin
• C3-5-03, Calculating the Weighted-Average Pool Accrual Rates for ARM Flex Pools Using a Weighted-Average MBS Margin
• C3-5-04, Pooling ARMs with a Conversion Option
• C3-5-05, Commingling ARMs in MBS
• C3-6-01, Parameters for Pooling Loans Into Fannie Majors
• C3-7-01, Establishing an MBS Trading Account
• C3-7-02, Initiating an MBS Sale
• C3-7-03, Making Good Delivery
• C3-7-04, Delivering MBS Pool Data and Documents
• C3-7-05, Confirming Presettlement Information
• C3-7-06, Settling the Trade
• C3-7-07, Sale of Fannie Mae Securities to Third Parties
• D1-1-01, Lender Quality Control Programs, Plans, and Processes
• D1-1-02, Lender Quality Control Staffing and Outsourcing of the Quality Control Process
• D1-2-01, Lender Prefunding Quality Control Review Process
• D1-3-01, Lender Post-Closing Quality Control Review Process
• D1-3-02, Lender Post-Closing Quality Control Review of Approval Conditions, Underwriting Decisions, and Documentation
• D1-3-03, Lender Post-Closing Quality Control Review of Data Integrity
• D1-3-04, Lender Post-Closing Quality Control Review of Appraisers, Appraisals, Property Data Collectors, and Property Data Collection
• D1-3-05, Lender Post-Closing Quality Control Review of Closing Documents
• D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit
• D2-1-01, General Information on Fannie Mae QC Reviews
• D2-1-02, Fannie Mae QC File Request and Submission Requirements
• D2-1-03, Outcomes of Fannie Mae QC Reviews
• D2-1-04, Identifying and Remedying Origination Defects Under the Remedies Framework
• E-1-01, References to Fannie Mae's Website
• E-1-02, List of Contacts
• E-1-03, List of Lender Contracts
• E-2-01, Required Custodial Documents
• E-2-02, Suggested Format for Phase I Environmental Hazard Assessments
• E-2-03, Revocable Trust Rider (Sample Language)
• E-2-04, Signature Requirements for Mortgages to Inter Vivos Revocable Trusts
• E-2-05, Servicing Marketplace — Mortgage Loan Servicing Purchase and Sale Agreement
• E-2-06, Correcting Errors in eNotes
• E-2-07, Description of eNote Header, Footer, and eNote Clause
• E-3-01, Acronyms and Glossary of Defined Terms: A
• E-3-02, Acronyms and Glossary of Defined Terms: B
• E-3-03, Acronyms and Glossary of Defined Terms: C
• E-3-04, Acronyms and Glossary of Defined Terms: D
• E-3-05, Acronyms and Glossary of Defined Terms: E
• E-3-06, Acronyms and Glossary of Defined Terms: F
• E-3-07, Acronyms and Glossary of Defined Terms: G
• E-3-08, Acronyms and Glossary of Defined Terms: H
• E-3-09, Acronyms and Glossary of Defined Terms: I
• E-3-10, Acronyms and Glossary of Defined Terms: J
• E-3-11, Acronyms and Glossary of Defined Terms: K
• E-3-12, Acronyms and Glossary of Defined Terms: L
• E-3-13, Acronyms and Glossary of Defined Terms: M
• E-3-14, Acronyms and Glossary of Defined Terms: N
• E-3-15, Acronyms and Glossary of Defined Terms: O
• E-3-16, Acronyms and Glossary of Defined Terms: P
• E-3-17, Acronyms and Glossary of Defined Terms: Q
• E-3-18, Acronyms and Glossary of Defined Terms: R
• E-3-19, Acronyms and Glossary of Defined Terms: S
• E-3-20, Acronyms and Glossary of Defined Terms: T
• E-3-21, Acronyms and Glossary of Defined Terms: U
• E-3-22, Acronyms and Glossary of Defined Terms: V
• E-3-23, Acronyms and Glossary of Defined Terms: W
• E-3-24, Acronyms and Glossary of Defined Terms: X
• E-3-25, Acronyms and Glossary of Defined Terms: Y
• E-3-26, Acronyms and Glossary of Defined Terms: Z

Share Loans and Recognition Agreements: Best Practices

A Share Loan is a type of financing that allows for an incoming Cooperative member to finance the initial purchase price of a membership and unit, or can be obtained by an existing member for improvements as specified in a Cooperative’s Bylaws. As part of the Share Loan process, a Recognition Agreement is executed by a Cooperative and a lending institution which sets forth the rights and responsibilities of the parties as well details as what happens if the member-borrower defaults on the member-borrower’s Share Loan. Generally, standard Recognition Agreements are overly Lender friendly and do not provide for specific rights that must be afforded to the Cooperative in the event of a default by the member-borrower. It is pertinent that any Recognition Agreement that is presented to a Cooperative from a Lender be specifically tailored to the needs of the Cooperative.

• Lender only being able hold ownership of the membership for the time that it takes to sell the membership;
• Lender has absolutely no rights as holder of the membership certificate;
• Lender to continue to pay carrying charges;
• Lender to continue to perform the obligations under the Occupancy Agreement; and
• Lender to exercise reasonable efforts to bring forth an approved applicant.

Related Posts

Remote Zoom Courtroom Hearings: Tips and Best Practices for Witness and Client Participation.

The use of Zoom and other digital, web-based or video conferencing technology has become widespread throughout courts in the United States, since the onset of the coronavirus pandemic. With glaring uncertainty on when courts will revert to conducting hearings and trials in-person, it is important to highlight some basic tips and best practices for our readers who may participate in Zoom hearings.

Fair Housing, Discrimination and Sexual Harassment: The Law, Examples, and Best Practices to Avoid Discrimination and Sexual Harassment Claims

With discrimination claims on the rise and the possible expansion of protected classes (i.e., sexual orientation or transgender status) from a recent United States Supreme Court opinion in Bostock v. Clayton Cty, Georgia, Nos. 17-1617 et. al., 590 U.S. ___ , (more) 140 S. Ct. 1731 (2020), in which the court held that under Title VII, it is unlawful discrimination for employers “to fail or refuse to hire, or to discharge any individual, or otherwise discriminate against any individual” because of their sexual orientation or transgender status, there is never a better time for housing cooperatives to refresh their knowledge of fair housing and employment issues. The law pertaining to fair housing, discrimination and sexual harassment claims are ever evolving and a complex field, so knowledge of key factors and best practices will put cooperatives in a better position to avoid unwarranted discrimination lawsuits. First, a recap of some fundamental laws, concepts and illegal conduct.

Insurance and Indemnity Provisions in Management Agreements: Not Your Typical Boilerplate Language

The Management Agreement between an association and a management agent outlines the contractual obligations and expectations between the association and the management agent. These contractual obligations define the duties and responsibilities of the management agent for the management and operation of the association. They also provide for the duties and responsibilities of the association, as effectuated through its Board of Directors. Equally as important to the management duties and operational provisions in the Management Agreement, so too are the insurance and indemnification provisions.

Share Loan Financing

Housing cooperatives do not fit into a one size fits all category. Not only may cooperatives’ governing documents be organized differently, but they also vary as to their structures. Typically speaking, cooperatives are comprised of multifamily townhomes or apartment style dwelling units. However, some cooperatives are high rise style living or are even comprised of detached single dwelling properties.

The Management Agreement between a cooperative and a management agent outlines the contractual obligations and expectations between the cooperative and the management agent. These contractual obligations define the duties and responsibilities of the management agent for the management and operation of the cooperative. It also provides for the duties and responsibilities of the cooperative corporation, as effectuated through its Board of Directors Equally as important to the management duties and operational provisions in the Management Agreement, so too are the insurance and indemnification provisions.

Adopting Ethics and Confidentiality Agreements for Cooperative’s Board of Directors

Members elected to serve on the Board of Directors hold special and unique positions as fiduciaries to the housing cooperative corporation. A Director holds a position of trust, fiduciary and good faith to the housing cooperative to which he or she serves. While members elected or appointed to serve as a Director may not always be the savvy corporate type, it is important for Cooperative’s to establish certain policies, sometimes best contained in an Agreement, for each Director that will spell out that Director’s responsibilities and duties pertaining to ethical corporate conduct and the handling of sensitive, confidential information.

Aztech Recognition Agreement Guide

Shareholders who have purchased a cooperative apartment (“co-op”) in New York City have probably heard of the Aztech Recognition Agreement (or “Aztec form”). It is a form/agreement that is required by the lender/bank to finalize a loan for a co-op. However, most co-op owners do not understand the agreement. Below, we will explain the legalities of an Aztech agreement.

hash-mark Table of Contents

What is an Aztech Recognition Agreement? What Does an Aztech Recognition Agreements Say? Typical Aztech Agreement Clauses Why Are Aztech Forms Required? How do you Complete an Aztech Recognition Agreement? Aztech Recognition Agreements Benefits Aztech Recognition Agreement Bottom Line

hash-mark What Is an Aztech Recognition Agreement?

An Aztech Recognition Agreement is a form you complete when buying and financing a co-op apartment. An Aztech agreement acknowledges you, the shareholder, as the owner of the shares and the occupant of the apartment pursuant to the proprietary lease , and details what the legal process is if you stop making monthly maintenance payments or mortgage payments. The name of the form originates from the Aztech Document Systems Company, which standardized the agreement in the 1970s. Prior to the creation of a standard form, banks/lenders had to negotiate with each co-op individually. 

hash-mark What Does an Aztech Recognition Agreement Say?

An Aztech recognition agreement states that the co-op also corporation consents to the fact that the bank/lender is lending the shareholder money in exchange for a lien on the shareholder’s lease and shares as collateral. The agreement prevents the co-op board and cooperation from consenting to any other encumbrances on the co-op without the bank/lender’s approval. This means that the co-op cannot consent to any additional loans, termination, or surrendering of the proprietary lease without the lender’s consent.

The Aztech agreement establishes that the lender/bank has the first priority lien or superior lien on the buyer’s shares of a cooperative apartment. The proprietary lease is collateral for the loan.  

Lastly, the Aztech Recognition Agreement contains an indemnification clause, which requires the bank/lender to indemnify the co-op if the shareholder makes any claim against the co-op for its action pursuant to an Aztech agreement. 

hash-mark Typical Aztech Agreement Clauses

• Prohibit any additional debt to be secured by the shares in the apartment.
• Agree to notify the lender if the shareholder stops making his/her monthly maintenance payment 
• Agree that the bank/lender can make maintenance payments if the shareholder doesn’t. 
• Acknowledge the lender’s lien against the shares in the apartment in the event that the property is foreclosed or is sold.  

hash-mark Why Are Aztech Forms Required?

The bank/lender typically requires you to complete an Aztech form if you will need financing. Since the agreement allows banks/lenders to pay the maintenance fee if the shareholder doesn’t, this is beneficial for the co-op. Essentially, this acts as an insurance policy for the maintenance fees because lenders want to ensure that their collateral (the co-op shares) are clear as possible. On the other hand, if a shareholder is in default on their monthly maintenance payment, sending a copy of the notice to cure to the shareholder’s bank/lender is usually all it takes for the shareholder to become current with their maintenance payments. Many shareholders are afraid to default on their loans. 

Last but not least, the bank/lender agrees that the co-op gets paid first in a foreclosure. As such, in the event of a sale or foreclosure, the co-op is made whole first, then the lender can receive any remaining proceeds. 

In rare circumstances, the banks will ask the co-op to agree to a modified version of the Aztech agreement. In that event, the co-op’s lawyer may agree to minor changes, but the lawyer probably won’t agree to eliminate any provision that protects the co-op should it forget to notify the bank/lender of a shareholder’s default.

Due to the fact that the majority of Aztech conditions, for the most part, benefit Co-op corporations, they are typically happy to sign Aztech recognition agreements.

hash-mark Completing an Aztech Recognition Agreement

Aztech recognition agreements are typically one of the last items needed to complete your co-op application and sent towards the end of your loan underwriting process. Even though it’s 2022, Aztech agreements need original copies. Your lender will provide you with three originals of the Aztech Recognition Agreement for you to fill out. The bank will have already signed them, so after you sign and complete them, you will submit the forms with your co-op application to the board. Thereafter, a member of the co-op board will sign the agreement.  

hash-mark Aztech Recognition Agreements Benefits

The obvious benefit for buyers signing an Aztech Recognition Agreement is that it allows buyers to obtain financing for their co-op. 

A mortgage in a co-op is actually collateralized by the shares and proprietary lease.

Every co-op has its own customized proprietary lease, so the rules surrounding the use of shares as collateral for a mortgage vary. However, the current Aztech recognition forms have made it easy for buyers to finance a co-op purchase, easily.

hash-mark Aztech Recognition Agreement Bottom Line

Aztech agreements are part of the process of buying a co-op with a mortgage, and buyers will need to be prepared to complete them. They help protect the co-op's finances, which in the end protects your investment as well, as the last thing you want is for your co-op corporation to have financial troubles. 

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Balancing Act: How SNDAs and Recognition Agreements Can Keep Your Lease or Sublease from Collapsing

The COVID-19 pandemic brought challenges to many commercial real estate asset classes, and downtown office properties were no exception. For example, the downtown Chicago office market showed a record 18% vacancy rate at end of 2020. [1] These vacancies have encouraged landlords to find creative ways to make up for lost rent and to attract new tenants. For example, some building owners and investors are seeking to designate their building or surrounding area as a Class L historic landmark or are exploring the benefits of properties located within an Enterprise Zone so that they can take advantage of tax credits, regulatory exemptions, and other incentives. Yet, while these programs and designations may help reduce the strain on landlords and potentially result in lower rents to tenants, new and existing tenants should also assess and proactively manage the risk of a landlord’s potential insolvency.

As vaccines continue to roll out and companies prepare to return to the office, tenants will have the option of leasing office space directly from landlords, or through the sublease market. In this tenant-friendly market, a tenant should consider requesting that a landlord and the landlord’s lender enter into a subordination, non-disturbance and attornment agreement, commonly referred to as an “SNDA,” and subtenants may want to request that prime landlords enter into recognition agreements.

A Quick Overview

An SNDA is a tri-party agreement between a tenant, landlord, and landlord’s mortgagee under which the tenant agrees to subordinate its lease to the mortgagee’s lien in exchange for the mortgagee’s agreement to honor the terms of the lease if mortgagee forecloses on the property. In addition, the tenant also agrees that in the event the mortgagee forecloses on the property, the tenant will recognize the mortgagee as landlord and pay such mortgagee rent and any other amounts tenant is required to pay to landlord under the lease. In Illinois, an SNDA does not need to be recorded, but tenants should consider requesting that the SNDA be recorded because it provides constructive notice to third parties of the existence of the lease and therefore affords the tenant an additional layer of protection.

If the mortgage predates the lease and the lender forecloses without an SNDA in place, the lender can either reject the lease and require the tenant to vacate the property, or recognize the lease and perform as landlord. An SNDA eliminates this uncertainty for tenants.

I am a Tenant and this Sounds Great – How do I Get One?

Existing tenants should dust off their lease files to determine if an SNDA was negotiated and obtained at the time of execution of their lease, or if a landlord is required to obtain an SNDA pursuant to the terms of the lease. New tenants should attempt to negotiate into their term sheet with a potential landlord an obligation for a landlord to obtain an SNDA from their lender in connection with tenant executing the new lease. This request should be made when tenant is negotiating its term sheet and lease because landlord’s mortgagee has little incentive to agree to one after a lease has been fully executed.

Note, however, that lenders may be reluctant to enter into an SNDA with tenants leasing only a small space because the SNDA could make it harder for the lender to sell the property after foreclosure. Generally, tenants that lease more space will have more success convincing a potential landlord to obtain an SNDA for them in connection with a new lease.

Can Tenants Negotiate a Lender’s Form of SNDA?

Yes, but the question is to what extent. Lenders will typically negotiate their form SNDA depending on the importance of the tenant to the overall asset (based on factors such as the length of the lease term and size of the premises). Typical negotiated provisions include whether mortgagee will be required to complete any outstanding construction, recognize a tenant’s ability to offset rent pursuant to the terms of the lease, pay any remaining improvement allowance, pay casualty proceeds, or recognize tenant’s security deposit.

Recognition Agreements

Just as an SNDA provides certainty to a tenant that a tenant may remain in its premises after a landlord has failed to perform under its loan, a recognition agreement provides assurance to a subtenant that it may continue to operate in its premises if its sublandlord defaults under its lease with the owner of the building. More specifically, a recognition agreement is a contract between a subtenant and a prime landlord under which the prime landlord agrees to recognize the subtenant and the sublease if the tenant/sublandlord defaults under the prime lease and the prime landlord terminates the prime lease. If triggered, the sublease effectively replaces the prime lease for the duration of the sublease’s term. Importantly, while a recognition agreement will protect the subtenant if the tenant/sublandlord defaults, it will not protect the subtenant if the prime landlord defaults under its mortgage. Lenders rarely agree to enter into SNDAs with subtenants, but for a subtenant with enough negotiating leverage, an SNDA would provide an added layer of security to protect against this risk.

Who Benefits?

A recognition agreement benefits both subtenants and tenants/sublandlords. A tenant/sublandlord may appreciate a recognition agreement because, in many cases, if the tenant/sublandlord defaults under the prime lease, their liability is mitigated once the landlord finds a new tenant. Entering into a recognition agreement serves to effectively cap the tenant/sublandlord’s potential exposure by ensuring that another tenant will immediately take over the space if the prime lease is terminated.

Prime Landlord Considerations

While recognition agreements are an important tool for subtenants, a prime landlord may be reluctant to agree to one, particularly if the sublease is for less than the tenant/sublandlord’s entire space as the prime landlord may lose some flexibility in reletting the space. This is especially true if the landlord needs to reconfigure the floor plan or provide alternate access to accommodate both the subtenant and any new tenant. Further, if the prime landlord agrees to a recognition agreement, it will be required to honor the negotiated sublease terms. If a tenant/sublandlord agrees to under-market terms (which is especially possible given the ongoing pandemic), the landlord is stuck with those terms. If the prime landlord believes it could lease the subleased space on better terms, it may be less inclined to enter into a recognition agreement. On the other hand, a recognition agreement gives a landlord some additional certainty that if its tenant defaults, it will continue to have a revenue stream.

Thus, whether leasing or subleasing new office space or renegotiating existing arrangements, tenants should consider seeking SNDAs and/or recognition agreements as important protections in this challenging and uncertain market.

[1] Danny Ecker, COVID pushes downtown office vacancy to record high , Crain’s Chicago Business (January 13, 2021).

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Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Benjamin W.

Assignment of contract in real estate.

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

• Direct mailers
• Place newspaper ads
• Make posts in online forums
• Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

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General practitioner since 2005, general practice; civil disputes, torts.... logo Call us: (410) 878-7006 Menu Services Maryland Mobile Last Will & Testament Services All Maryland Legal Services Susan C. Trimble Attorney at Law WHAT WE ARE ABOUT Susan C. Trimble, is an established attorney in the Maryland area. Her work is infused with commitment to her community and family. is tailored to your wants and needs. Here you will find an approachable, personable and conscientious advocate. EDUCATION: Juris Doctorate (JD). University of Baltimore School of Law, Baltimore, Maryland, USA. 2006. Bachelor of Science (BS), English Literature. Towson University, 1989. Associate in Claims, (AIC) certification. Fraud Claims Law Associate, (FCLS) certification.

I have been practicing law since 2018. I used to be a litigator at a nationwide practice before going in-house at a fintech company. I have experience drafting NDAs, SaaS contracts, service agreements, and stock purchase agreements.

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Litigation and Immigration Attorney with over 12 years of experience.

My name is Deborah Schwab, and I am an experienced attorney with a background in real estate, contract negotiation, and corporate governance. Currently, I am a transactional counsel with Priscott Legal, LLC, the partner law firm of Ontra.ai. In this remote role, I represent private equity and VC firms and negotiate a high volume of non-disclosure agreements, joinders, and other legal contracts. Prior to this, I served as legal counsel for PennTex Ventures, LLC, where I was responsible for negotiating, drafting, and reviewing contracts and agreements for sales and acquisition of real estate, lease negotiation, and resolving issues involving ancillary transactions. As the first in-house counsel for PTV, I was responsible for all legal and compliance matters and managed outside legal counsel. Before joining PennTex Ventures, I worked as real estate counsel for 84 Lumber & Nemacolin Woodlands, Inc., where I acquired eleven properties with a portfolio value in excess of $15 million. Prior to this, I spent several years as an attorney and supervisor at CNX/Consol Energy, where I worked as a title attorney, trained and managed a team of title attorneys/analysts, conducted due diligence for large land transactions, and identified business/legal risk exposure for multi-state projects. I received my Juris Doctor from Duquesne University and hold a Post Baccalaureate Paralegal Certificate from the same institution. Additionally, I earned a Bachelor of Arts from the University of Pittsburgh. I am also a court-appointed special advocate working as a volunteer with children who are in the foster care system. Thank you for taking the time to view my profile. I am always open to new opportunities and would be happy to connect with you.

Education: Georgetown Law (83), Yale (75- BA in Economics), Hotchkiss School (1970). Practice areas have included commercial litigation, individual litigation, and securities litigation and arbitration.

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I am a highly skilled attorney, fluent in English and Spanish with 20 years of legal experience and 8 additional years of real estate, project finance, banking, financial, securities, and start-up company experience. I worked 6 years with 2 international law firms and handled extremely complex work for all types of clients, 3 years with a Federal Government Regulator, and 5 years in various compliance management positions at national and international financial institutions. I am licensed in New York and North Carolina. I will handle federal litigation on a non-contingency basis. I also practice Appellate Advocacy for constitutional, employment, consumer, and corporate laws. I am skilled in many different NY and NC laws. I have successfully represented clients with state and federal regulatory investigations. I can help you with the FDA, SEC, OCC, CFPB, FDIC, FR and certain state regulators.

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Ignite Success with an Effective Assignment and Assumption Agreement: A Comprehensive Guide

LegalGPS : July 27, 2023 at 8:01 AM

Running a successful business is all about staying on top of your game—and that includes being able to navigate legally complex situations with ease. One concept that often comes up in the world of contracts is the assignment and assumption agreement. If you're a business owner who needs a quick yet comprehensive rundown of what an assignment and assumption agreement is and how to create one, you've come to the right place.

In this guide, we'll walk you through the ins and outs of assignment and assumption agreements, and even provide you with a step-by-step explanation of how to put one together. So grab your favorite cup of coffee and let's get started!

Being able to efficiently manage and transfer contractual rights and obligations is crucial for businesses of all sizes. Whether you're selling a portion of your company or entering into a new partnership, having a solid assignment and assumption agreement in place can save you time, resources, and potential legal headaches down the line.

That being said, it's important to ensure that your assignment and assumption agreement is accurate, comprehensive, and tailored to suit your specific needs. And that's where this guide comes in. We'll help you understand the role of assignment and assumption agreements in your business and give you the tools you need to create one with confidence.

What is an Assignment and Assumption Agreement?

Before we dive into the nitty-gritty of creating an assignment and assumption agreement, it's important to understand what it is and why it's important for your business. In simple terms, an assignment and assumption agreement is a legal document that transfers the rights and obligations of one party (the "assignor") in an existing contract to another party (the "assignee"). Essentially, it allows one party to step out of a contract and another party to step in, taking over the original party's rights and responsibilities.

An assignment and assumption agreement typically serves a few key purposes, including:

Transferring ownership or control of assets

Refinancing debt or other financial arrangements

Splitting or consolidating business entities

A well-crafted agreement not only helps ensure a smooth transition but also protects all parties involved from potential misunderstandings and disputes.

The Importance of an Accurate Assignment and Assumption Agreement

Now that you have an idea of what an assignment and assumption agreement entails, let's talk about why it's so important to get it right. Without a solid agreement in place, both the assignor and the assignee can face a whole host of problems, from miscommunications to legal disputes.

For one, an unclear or vague agreement can leave both parties open to misinterpretation and misunderstanding, which can result in disputes down the line. This is especially true when considerable assets or financial interests are at stake—having an accurate agreement in place helps protect both parties from future legal battles.

Moreover, without an agreement that specifically assigns rights and obligations to the assignee, the original parties to the contract may still be bound by its terms. This can give rise to unwanted legal complications and may even defeat the purpose of entering into the assignment and assumption agreement in the first place.

In short, a well-written assignment and assumption agreement protects both parties and helps prevent future misunderstandings and disputes.

How to Write an Assignment and Assumption Agreement: Step-by-Step Guide

Now that we've covered why having an accurate assignment and assumption agreement is so crucial, let's walk through how to write one. Keep in mind that every contract is unique, so your agreement should be tailored to your specific situation.

Step 1: Identifying Parties and their Roles

The first step in creating an assignment and assumption agreement is to clearly identify the parties involved and their respective roles. This typically includes the assignor, assignee, and the original counterparty to the contract (the "obligor"). Be sure to include the legal names and contact information for each party, including any business entities, individuals, or other parties that may be involved.

Moreover, all parties should be represented by a lawyer who is licensed to practice law in the state where the property is located.

Step 2: Describing the Original Contract

The next step is to describe the original contract being assigned and assumed, also known as the "underlying contract." This should include a brief description of the terms and conditions of the underlying contract, as well as the date on which it was executed. You may also want to include a reference to the specific section(s) of the underlying contract that permit assignment, if applicable.

For example, if the underlying contract is a lease agreement, you may want to point out that the lease allows for assignment.

Step 3: Detailing the Assignment and Assumption

Now, it's time to get into the heart of the agreement—the actual assignment and assumption. In this section, you'll need to outline the specific rights and obligations being transferred from the assignor to the assignee, including any limitations or conditions related to the transfer.

You should also identify the effective date of the assignment and assumption, which may be the date on which the agreement is executed, or a later date specified by the parties. In some cases, you may also need to consider any rights or obligations that will remain with the assignor after the assignment and assumption take effect.

Step 4: Consent of the Obligor

In some cases, the assignment and assumption of a contract may require the consent of the obligor. If this is the case, you should include a section in your agreement describing the obligor's consent, including any conditions or limitations on the consent, if applicable.

This is important because if the obligor does not consent or if there are conditions on the consent, it may prevent your assignment and assumption from taking effect.

Step 5: Governing Law and Jurisdiction

It's crucial to establish which laws will govern your assignment and assumption agreement, in case any disputes arise later on. Include a section specifying the state or country whose laws will apply to the agreement, as well as the jurisdiction where any legal disputes will be resolved.

However, make sure the law you choose is not one that would be considered unfair to either party. For example, if one of your companies is based in a state that has laws favorable to creditors and the other company is based in a state with more favorable laws for debtors, it may be best to choose another state as your governing law.

Step 6: Signatures

Finally, the last step in creating an assignment and assumption agreement is to have all parties sign and date the document. This is typically done at the end of the agreement, after all terms and conditions have been outlined. Be sure to include lines for the signatures of the assignor, assignee, and the obligor (if their consent is required), as well as a space for each party to print their name and title, if applicable.

Pros and Cons of Using an Assignment and Assumption Agreement Template

When it comes to creating an assignment and assumption agreement, you might be considering using a contract template. While templates definitely have their advantages, such as saving time and ensuring that you cover all of the necessary legal bases, there are also some potential downsides to be aware of.

One major advantage of using a template is that it can save you time by providing a well-structured starting point for your agreement. Templates also generally include the essential sections and clauses that most agreements need, helping to ensure that your agreement is legally compliant and thorough.

The main disadvantage of using a generic template is that it may not be tailored precisely to your specific needs. This can result in an agreement that doesn't fully address the nuances of your situation or provide adequate protection for all parties involved. If you're unsure about whether a template is appropriate for your situation, you should consider consulting a legal professional or purchasing a customizable contract template that can be adapted to your specific circumstances.

The Benefits of Choosing Our Contract Template

There's no doubt that a well-designed contract template can be a game-changer when it comes to drafting assignment and assumption agreements. And that's where our expertly crafted template comes into play. Here's what sets our template apart:

Designed by legal professionals with years of experience

Simplified language for easier understanding

Customizable to suit your specific needs and requirements

By choosing our contract template, you can feel confident knowing that you're getting a legally compliant and strategically sound agreement that's tailored to your situation. So why wait? Purchase our expertly designed assignment and assumption agreement template and ensure your business's success today!

In the world of business, contracts play a crucial role in protecting your assets and interests. And when it comes to assignment and assumption agreements, accuracy and clarity are key. We hope this comprehensive guide has given you the tools and understanding you need to confidently create your own assignment and assumption agreements.

Ready to make your life easier? Grab our expertly designed assignment and assumption agreement template today and streamline your business operations with confidence!

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Understanding the Basics of Assignment and Assumption Agreements

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Note: Links to our free templates are at the bottom of this long guide. Also note: This is not legal advice

Introduction

Understanding the importance of assignment and assumption agreements is essential for any business transaction. These agreements are legal documents which outline the transfer of ownership, rights, and obligations from one party to another in order to protect both parties from liabilities and disputes. Moreover, they help streamline the transition of ownership by providing a clear agreement between all involved.

At Genie AI, we understand that navigating these agreements can be difficult without legal expertise - but it doesn’t have to be! Our team provides free assignment and assumption agreement templates so that anyone can draft high-quality legal documents without paying hefty lawyer fees.

These agreements are crucial in corporate mergers, asset sales, and other business transactions as they protect both assignee and assignor from potential future disputes or disagreements. Furthermore, it helps everyone involved in the process come to an agreement about the transfer of assets or liabilities.

It’s also important for businesses to ensure that all records, documents, and information is properly transferred when assigning contracts - something which assignment and assumption agreements make simpler. Not only does this avoid any potential issues in the future but ultimately makes for a smoother transition when dealing with such matters.

In short, assignment and assumption agreements provide an invaluable service when it comes to safeguarding both parties involved in a business transaction while also simplifying their processes along the way. To learn more about how our team at Genie AI can help you on your way towards drafting these essential documents - read on below for our step-by-step guidance or visit us today to access our template library!

Definitions

Assignor: The party transferring the rights and liabilities. Assignee: The party receiving the rights and liabilities. Asset Assignment and Assumption Agreement: An agreement used when one party transfers all or part of their ownership of a particular asset to another party. Liability Assignment and Assumption Agreement: An agreement used when one party transfers all or part of their liability to another party. Contract Assignment and Assumption Agreement: An agreement used when one party transfers all or part of their contractual obligations to another party. Lease Assignment and Assumption Agreement: An agreement used when one party transfers all or part of their responsibilities under a lease to another party. Representations and Warranties: Promises made by the Assignor and Assignee in order to ensure they understand the risks associated with the transfer and are comfortable taking on the rights and liabilities. Indemnification: A clause outlining the terms under which the Assignor and Assignee are liable for any losses or damages due to the transfer. Choice of Law: A clause specifying which jurisdiction’s laws will govern the agreement. Severability: A clause outlining how the agreement will be enforced if any part of it is deemed unenforceable. Governing Law: A clause specifying which court will have jurisdiction over any disputes that arise out of the agreement. Notices: A clause outlining how notices between the parties will be delivered.

Definition of Assignment and Assumption Agreement

Overview of the different types of assignment and assumption agreements, asset assignment and assumption agreement, liability assignment and assumption agreement, contract assignment and assumption agreement, lease assignment and assumption agreement, the purpose of an assignment and assumption agreement, the process of negotiating an assignment and assumption agreement, identifying the parties involved, discussing the terms, drafting the agreement, final review and signing, key terms and clauses commonly found in assignment and assumption agreements, assignor & assignee, liabilities and obligations, representations and warranties, indemnification, choice of law, severability, governing law, potential issues that may arise when negotiating an assignment and assumption agreement, scope of liabilities, representations & warranties, dispute resolution, contractual limitations, practical considerations when drafting an assignment and assumption agreement, identifying contingent liabilities, understanding applicable laws, drafting clear & concise language, complying with any regulatory requirements, potential benefits of using an assignment and assumption agreement, risk reduction, asset protection, cost savings, potential pitfalls of using an assignment and assumption agreement, unforeseen risks, negotiating difficulties, regulatory non-compliance, conclusion and next steps, finalizing the agreement, implementing the agreement, documenting the outcome, get started.

• Understand the legal definition of an Assignment and Assumption Agreement: an agreement between two parties, which transfers one party’s rights, duties and obligations under a contract to another party
• Learn who can enter into an Assignment and Assumption Agreement: the parties to the original contract, or their successors
• Know what rights and obligations are transferred under an Assignment and Assumption Agreement: all rights, duties, and obligations that have been agreed upon in the original contract
• Be aware of the consequences of assigning and assuming obligations: the assignee is responsible for performing all duties and obligations of the contract, just as if they had originally entered into the contract.
• When you can check off this step: You will know you have a good understanding of the definition of an Assignment and Assumption Agreement when you can explain it in your own words and are aware of the rights and obligations transferred and the consequences of assigning and assuming obligations.
• Understand the three common types of assignment and assumption agreements: asset assignment and assumption agreement, contractual assignment and assumption agreement, and debt assignment and assumption agreement
• Learn the key features of each type, including the type of asset or obligation being assigned and assumed
• Determine the purpose of the agreement and the advantages of each type of agreement
• Check off this step when you feel confident that you understand the purpose and differences between the three types of assignment and assumption agreements.
• Research and understand the definitions of an asset assignment and assumption agreement
• Learn the different types of assets that can be assigned and assumed in an agreement
• Understand the purpose of an asset assignment and assumption agreement
• Research and review the legal elements of an asset assignment and assumption agreement, such as the parties involved, the assignor and assignee, the description of the assets to be assigned and assumed, the consideration for the assignment and assumption, the representations and warranties of both parties, the indemnification and other relevant provisions
• Draft an asset assignment and assumption agreement with the help of a qualified attorney
• When you are satisfied with the asset assignment and assumption agreement that you have drafted, execute the agreement according to the applicable law and have it notarized
• Check this off your list and move on to the next step, which is understanding liability assignment and assumption agreements.
• Research applicable state and federal laws to ensure the agreement is in compliance
• Draft a liability assignment and assumption agreement that assigns all liabilities of the transferor to the transferee
• Identify all liabilities to be assigned, including any and all warranty liabilities, product liabilities, and medical liabilities
• Include all necessary clauses that provide for the transfer of the liabilities, and state that the transferor will not be liable for any liabilities after the date of the agreement
• Get the agreement approved by the assigning and assuming parties
• Sign and date the agreement in the presence of a witness
• Once all parties have signed the agreement, you can check this off your list and move on to the next step of drafting the Contract Assignment and Assumption Agreement.
• Understand the difference between an assignment and an assumption agreement. An assignment agreement transfers the rights and obligations of the original contract from one party to another, while an assumption agreement transfers only the obligations of the original contract to the new party.
• Familiarize yourself with the language of the assignment and assumption agreement. The agreement should clearly state the terms of the assignment, the obligations assumed by the new party, and the liabilities being transferred.
• Draft the assignment and assumption agreement. Make sure to include all relevant details, such as the parties involved, the original contract being transferred, the new obligations assumed by the new party, and any other important information.
• Review the agreement with a legal professional. It is important to have a lawyer or other legal professional review the agreement to make sure it meets all legal requirements.
• Sign the agreement. Once both parties have signed the agreement, it is officially binding and the obligations of the original contract are now transferred to the new party.

You will know when you can check this off your list and move on to the next step when you have completed all steps in this section, including drafting, reviewing, and signing the agreement.

• Understand the basics of a lease assignment and assumption agreement
• Have an understanding of the parties involved in the agreement
• Know what is included in the agreement such as the particular lease, the transferor, the transferee, a consideration amount, date of assignment, and other related documents
• Have an understanding of the legal implications of the agreement as far as warranties, liabilities, and other related obligations
• Understand the process of executing the agreement and any other related steps required
• Be aware of any local or state laws that may affect the agreement

Once you have a thorough understanding of the lease assignment and assumption agreement, you can check off this step and move on to the next step in the guide: The Purpose of an Assignment and Assumption Agreement.

• Understand the purpose of an assignment and assumption agreement, which is to transfer rights and obligations from one party to another
• Learn the different types of assignment and assumption agreements, such as lease assignment and assumption agreements, purchase and sale agreements, and contracts
• Identify the parties involved in the agreement, what rights and obligations are being transferred, and how the agreement will be executed
• Once you understand the purpose of an assignment and assumption agreement, you can move on to the next step in the guide
• Research and determine the terms of the agreement that are appropriate for your situation
• Identify any potential legal issues that could arise from the assignment and assumption agreement
• Draft the agreement that outlines the terms, conditions, consideration, and liabilities
• Both parties must review and approve the agreement in its entirety
• Make sure the agreement is signed by both parties and that each party has a copy of the agreement
• When both parties have agreed upon and signed the agreement, the assignment and assumption agreement is officially enforceable
• You can check this step off your list and move onto the next step once the agreement is signed and all parties have a copy.
• Identify all parties involved in the agreement, including the assignor, the assignee, and any other third parties
• Be sure to document all of the parties in the agreement and provide contact information for each
• Get contact information for all parties involved, including names, addresses, and phone numbers
• Verify that all parties involved are of legal age and able to enter into a binding agreement
• Make sure that all parties understand their roles and obligations in the agreement

When you can check this off your list: When all parties have been identified, contact information has been provided, and all parties understand and accept their roles and obligations in the agreement.

• Learn the key terms used in assignment and assumption agreements, such as “assignor” and “assignee.”
• Understand the scope of the agreement and the rights and obligations of each party.
• Consider any potential restrictions that might be in place.
• Identify any laws or regulations that affect the agreement.

You can check this step off your list and move on to the next step when you have a basic understanding of the terms used in the agreement, and the scope of the agreement and the rights and obligations of each party.

• Determine the parties involved in the assignment and assumption agreement and obtain contact information for each.
• Draft the agreement and include all the agreed upon terms and conditions.
• Review the agreement with all parties to ensure the terms and conditions are accurately reflected.
• Revise the agreement as needed to reflect any changes or amendments.
• Once all parties have agreed to the agreement and all revisions have been made, the agreement is ready to be signed.
• Carefully review the agreement to ensure that all the details and clauses are accurately reflected
• Make sure all parties to the agreement have signed the document
• Have all parties to the agreement keep a signed copy of the document for their records
• Once all parties have signed the document, you can check this off your list and move on to the next step.
• Familiarize yourself with the language and terminology used in assignment and assumption agreements.
• Understand the components of the agreement, such as the assignor, assignee, consideration, and liabilities.
• Become familiar with the common clauses found in assignment and assumption agreements, such as the warranty clause, assignment clause, and liability clause.
• Review the agreement for accuracy and ensure that all of the terms and conditions are clear.
• Once you have a full understanding of the key terms and clauses in the agreement, you can move on to the next step in the process.
• Determine who is the assignor and who is the assignee - the assignor is the one who is transferring their rights and obligations to the assignee
• Know the difference between the assignor and assignee - the assignor is the party transferring the rights and obligations, and the assignee is the party receiving them
• Understand the implications of the assignment and assumption agreement - the assignor is no longer responsible for the rights and obligations they are transferring to the assignee
• Make sure that the assignor and assignee are both aware of their respective roles and responsibilities - this will ensure that the agreement is legally binding

Once you have determined who the assignor and assignee are, know the differences between them, understand the implications of the agreement, and make sure both parties are aware of their roles and responsibilities, you can move on to the next step.

• Identify and list out all of the liabilities and obligations that are being assigned in the agreement
• Ensure that all liabilities and obligations of the assignor that are to be assumed by the assignee are included in the agreement
• Specify the date on which the liabilities and obligations are to be assumed by the assignee in the agreement
• Make sure that the assignee is aware of and accepts the liabilities and obligations that are being assigned
• Confirm that the assignor is not liable for any of the liabilities and obligations that are being assigned to the assignee
• Make sure to include a clause in the agreement that states that the assignor will not be liable for any of the liabilities and obligations that are being assigned to the assignee

When you can check this off your list and move on to the next step:

• When the assignor and assignee have agreed on all of the liabilities and obligations that are being assigned in the agreement
• When the assignor has agreed to not be liable for any of the liabilities and obligations that are being assigned to the assignee
• When the agreement has been reviewed and approved by both the assignor and assignee
• Ensure that all statements made by the assignor and the assignee are accurate and current
• Identify all representations and warranties made by the assignor to the assignee
• Make sure that any representations and warranties made by the assignor are clear and enforceable
• Verify that any representations and warranties made by the assignee are accurate and up-to-date
• Determine the remedies for breach of any representations and warranties

You can check this off your list and move on to the next step when you have identified all representations and warranties, verified that they are accurate and up-to-date, and determined the remedies for breach.

• Assignor should agree to indemnify Assignee from any and all claims, losses and damages that arise from breach of representations and warranties
• Assignor should agree to pay Assignee’s legal fees and other costs associated with defending against any claim
• Assignee should agree to indemnify Assignor from any and all claims, losses, and damages that arise from the Assignee’s actions after the transfer of the subject matter
• Once these indemnification terms are set, you can check this step off your list and move on to the next step.
• Determine the state law that will govern the agreement. Generally, the state law that will be applicable is the state in which the agreement is executed.
• The state law that you choose should be clear and explicit. Consider consulting a lawyer or legal advisor if you are unsure of the applicable state law.
• Make sure to include the state law that has been agreed upon in the agreement.
• Check off this step when the applicable state law has been determined and included in the agreement.
• Read your agreement carefully to ensure that the severability clause is properly drafted
• The severability clause should state that if any portion of the agreement is found to be invalid or unenforceable, the remaining provisions will remain in full force and effect
• Familiarize yourself with the definitions of severability, enforceability, and invalidity
• Make sure that the agreement includes a severability clause that is tailored to the particular agreement
• Once you are confident that the severability clause is properly drafted, you can check this step off your list and move on to the next step.
• Research governing laws in the jurisdiction where the agreement will be signed and enforced
• Determine the laws that will govern the agreement and include them in the governing law clause
• This clause should include the state, country, or other jurisdiction
• Once you have determined the governing laws and included them in the clause, you can check this off your list and move on to the next step.
• Ensure that the agreement includes a provision specifying a proper notice address for each party
• Check that the notice provision includes the name and address of the recipient, the method of service (e.g., mail, e-mail, or fax), and the time period for responding
• Review the agreement to make sure that it includes a provision specifying the manner in which the parties will provide notice to each other
• Confirm that notice is defined correctly, as this is important for determining the time period for responding
• Once all of these points have been verified, you can check this off your list and move on to the next step.
• Review the agreement to make sure that the assignment language is drafted correctly and is broad enough to encompass all of the rights and obligations being assigned
• Ensure that the parties are not trying to assign any rights or obligations that are not legally assignable
• Make sure that the agreement is clear regarding the liabilities of the parties, as they will be assumed by the assignee
• Confirm that the assumptions being made by the assignee are clearly laid out in the agreement
• Ensure that the agreement is not assigning any rights or obligations that may be subject to the consent of a third party
• When all potential issues have been addressed, the agreement can be signed by both parties.
• Understand that an Assignment and Assumption Agreement (A&A) will transfer some of the liabilities from one party to another in a business transaction
• Identify which liabilities are to be transferred in the A&A
• Clarify which liabilities will remain with the original party
• Establish a timeline for the transfer of liabilities
• Decide which party is responsible for liabilities that occur after the transfer
• Make sure that the liabilities are accurately defined and described in the A&A

You will know that you can check this step off your list and move on to the next step when all liabilities have been properly identified, defined and described in the A&A, and all parties have agreed to the timeline for the transfer of liabilities.

• Understand the basics of Representations & Warranties and what they mean in the context of assignment and assumption agreements
• Learn what should be included in Representations & Warranties and the consequences of not making accurate representations
• Research different types of Representations & Warranties, such as those related to title, capacity, authority, and performance
• Check that all Representations & Warranties included in the agreement are accurate and up-to-date
• Once all Representations & Warranties have been reviewed and confirmed to be accurate, you can check this step off your list and move on to the next step of the guide.
• Understand that disputes under an Assignment and Assumption Agreement are generally handled by the parties involved
• Understand the purpose of an arbitration clause in the agreement, which is to resolve disputes quickly, fairly, and affordably
• Determine if the agreement should include a mediation clause, which is less formal than arbitration and may be more suitable for some disputes
• Consider whether the agreement should include a choice of law clause, which will determine the governing law of the agreement
• Know that the agreement should specify the venue for any potential dispute resolution proceedings
• Understand that the parties may need to provide notice to the other party before initiating a dispute resolution procedure
• When you have a full understanding of how disputes will be handled under the Assignment and Assumption Agreement, you can check this step off your list and move on to the next step.
• Understand the importance of the contractual limitations outlined in the agreement
• Make sure all parties involved in the agreement have agreed to the contractual limitations
• Know that contractual limitations are meant to protect the parties involved in the agreement
• Be aware that contractual limitations may include time limits, scope of duties, and other stipulations
• When all parties involved have agreed to the contractual limitations, you have completed this step and can move on to the next step.
• Familiarize yourself with the applicable laws in the jurisdiction in which the assignment and assumption agreement will be executed
• Make sure to include language in the agreement that will address any issues that may arise due to a conflict of laws
• Ensure that the agreement properly identifies and describes the rights, obligations, and interests that are being assigned and assumed
• Identify any contingencies that could affect the transfer of rights and obligations, and include language that addresses such contingencies
• Consider adding any additional provisions that may be necessary to ensure the successful completion of the transaction

You can check this off your list and move on to the next step when you have addressed any issues that may arise due to a conflict of laws, properly identified and described the rights, obligations and interests that are being assigned and assumed, identified any contingencies that could affect the transfer of rights and obligations, and considered adding any additional provisions that may be necessary to ensure the successful completion of the transaction.

• Identify all contingent liabilities that must be assumed by the assignee, including any pending or potential claims and obligations
• Make sure the assignee is aware of, and willing to assume, the contingent liabilities
• Include language in the assignment and assumption agreement that outlines the assignee’s assumption of any contingent liabilities
• Check that the provisions in the agreement precisely identify the liabilities assumed by the assignee
• When all contingent liabilities have been identified and included in the agreement, you can move on to the next step of understanding applicable laws.
• Research applicable laws related to assignment and assumption agreements in your jurisdiction
• Understand the legal language and key elements of an assignment and assumption agreement
• Understand the process for filing and registering an assignment and assumption agreement
• Know what documents and information may be required to complete the registration process
• Understand the timeline for completion of the registration process
• Once you have a good understanding of the applicable laws and the process for registration, you can move on to the next step of identifying any contingent liabilities.
• Research the applicable law, and use language that is consistent with the requirements
• Draft a clear and concise agreement that covers all relevant topics
• Ensure that the language used is precise and unambiguous
• Define any legal terms used in the agreement
• Make sure that the agreement is in writing and all parties have signed it
• Review the agreement and make sure it is legally compliant
• When all of the above steps are completed, you can move on to the next step in the guide.
• Research applicable laws and regulations that may apply to the assignment and assumption agreement
• Obtain any necessary licenses or permits, such as a real estate license
• Ensure that all parties understand the regulations that apply to the agreement
• Determine if any state or federal laws need to be adhered to
• When all applicable laws and regulations have been taken into account and complied with, you can move on to the next step.
• Understand the potential advantages of using an Assignment and Assumption Agreement, including:
• Transferring existing contractual obligations and liabilities from one party to another
• Ensuring continuity in contractual agreements between parties
• Avoiding the need for a new contract
• When you have a solid understanding of the potential benefits of using an Assignment and Assumption Agreement, you can check off this step and move on to the next one, which is Risk Reduction.
• Identify the potential risks that are associated with an assignment and assumption agreement
• Analyze how the assignment and assumption agreement may reduce those risks
• Understand the legalities that would protect both parties in the agreement
• Be aware of the potential regulatory requirements that may apply
• When you have thoroughly assessed the risks and understand how an assignment and assumption agreement can protect both parties, you are ready to move on to the next step.
• Understand the definition of an assignment and an assumption agreement
• Learn the differences between the two agreements
• Familiarize yourself with the processes and procedures of an assignment and assumption agreement
• Understand the legal implications of an assignment and an assumption agreement
• Familiarize yourself with the potential benefits of an assignment and assumption agreement
• Understand how an assignment and assumption agreement can be used to protect assets

You’ll know you can check this off your list and move on to the next step when you have a good grasp of the processes and procedures associated with an assignment and assumption agreement, the legal implications of such an agreement, and the potential benefits of using one.

• Understand the different costs associated with the transfer of assets, such as attorney’s fees, recording fees, and transfer taxes
• Consider the potential cost savings of using an assignment and assumption agreement as opposed to other methods of transferring assets
• Determine the effect of the transfer on the financial statements of both parties
• Review the agreement to ensure all costs are accounted for

When you have a thorough understanding of the cost savings to be made and have reviewed the agreement to ensure all costs are accounted for, you can move on to the next step.

• Be aware of the potential conflicts of interest between the assignor and assignee when an Assignment and Assumption Agreement is used
• Consider applicable laws, regulations and contractual restrictions when determining if an Assignment and Assumption Agreement is the best option
• Understand that if an Assignment and Assumption Agreement is used, both the assignor and assignee will remain liable for any existing obligations
• Be aware that the assignee may not have the same rights as the assignor under the agreement and may not have direct access to the original contract
• Understand that the assignee may be liable for any damages or losses caused by the assignor’s breach of the agreement

You’ll know when you can check this off your list and move on to the next step when you have a good understanding of the potential pitfalls and responsibilities associated with using an Assignment and Assumption Agreement.

• Understand that when assuming liabilities, there are certain risks that may be unforeseen and difficult to calculate
• Be aware that the assignor of the agreement can still be held liable if any unanticipated risks arise
• Carefully review the agreement to ensure that the assignor and the assignee are both protected from unforeseen risks
• Discuss any potential risks with legal counsel to ensure that all parties understand the potential risks
• Have all parties sign the agreement to ensure that everyone is aware of the risks and agrees to them
• When all parties have signed, the agreement can be considered complete and all parties can move forward with the transfer of liabilities
• Understand the differences between the two parties and their respective interests
• Identify the areas where both parties can agree on specific terms and conditions
• Determine which party will be liable for any breaches of the agreement
• Negotiate a fair deal that both parties can agree to
• Consider any legal, financial, and tax implications for both parties
• Once negotiations are complete, have the parties sign the agreement
• Make sure that both parties understand the terms and conditions of the agreement
• Verify that both parties are in agreement and that all negotiations are complete
• Check that all the required legal documents are present and in order
• Check that all parties involved are aware of their respective responsibilities

You’ll know when you can check this off your list and move on to the next step when all parties have agreed to the terms and conditions of the agreement, all required legal documents have been provided and in order, and all parties have signed the agreement.

• Research the laws and regulations that apply to the transaction, including state and local statutes, to assess potential risks
• Check for any filing requirements or permits that need to be obtained
• Identify any restrictions that could occur due to the parties involved
• Document any potential regulatory non-compliance issues
• When all potential risks have been identified and documented, you can move on to the next step.
• Review the terms and conditions of the agreement, as well as any applicable regulations, to ensure that all parties have a clear understanding of the agreement as a whole.
• Seek legal counsel if there are any questions or concerns about the agreement.
• Finalize the agreement by signing and exchanging documents.
• After the agreement has been finalized, it will be legally binding and enforceable.
• Make sure all parties are aware of their responsibilities and obligations under the agreement.
• Monitor the agreement to ensure that all parties are complying with the terms and conditions of the agreement.
• Check off this step when the agreement has been finalized and all parties have signed and exchanged documents.
• Review the agreement carefully and make sure all parties have signed off
• Make sure all parties have received a copy of the agreement
• Ensure that all parties have received the agreed-upon consideration
• File the original agreement with all relevant documents with the appropriate government agency or court
• You will know that you have finished this step when all parties have signed the agreement, all parties have received a copy, and the original agreement has been filed with the appropriate government agency or court.
• Execute the agreement, making sure both parties have signed it and that all parties involved have read, understood, and accepted the terms and conditions of the agreement.
• Make sure that the agreement has been filed with the appropriate state or federal agency, if required.
• Start the process of transferring assets and obligations from the assignor to the assignee, as outlined in the agreement.
• Make sure that all parties have the necessary information to complete the assignment and assumption. This may include but is not limited to: legal documents, financial documents, contracts, and other pertinent information.
• Ensure that all parties have received the necessary payment for the assignment and assumption.
• Check that all parties have complied with the terms and conditions of the agreement.
• You can check this off your list once you have completed all the steps necessary for the successful implementation of the agreement.
• Ensure you have all relevant documents, such as the assignment and assumption agreement, and any other documents mentioned in the agreement
• Gather all necessary signatures from the parties involved
• Make copies of the signed documents for all parties
• File the original documents with the appropriate governmental agency or court
• Update any necessary records, including those within your company
• Verify that all documents have been properly filed
• You can check off this step and move on to the next step when all documents have been properly signed and filed.

Q: What is the difference between an Assignment and Assumption Agreement and a novation agreement?

Asked by Zane on 27th March 2022. A: An Assignment and Assumption Agreement is used to transfer contractual rights and obligations from one party to another, while a novation agreement is used to substitute one contracting party with another. In a novation agreement, all three parties must agree to the substitution, while in an Assignment and Assumption Agreement, only two parties are involved.

Example dispute

Lawsuit referencing assignment and assumption agreement.

• A plaintiff may raise a lawsuit referencing an assignment and assumption agreement when one party assumes the rights and obligations of another party in a contract.
• The lawsuit may be raised if the party that assumed the rights and obligations did not fulfill them or did not fulfill them in the manner agreed upon in the contract.
• The plaintiff must provide proof that the party failed to fulfill the rights and obligations of the contract in order to win the lawsuit.
• Settlement may be reached through a negotiated agreement between the parties.
• Damages may be awarded if the plaintiff can prove the losses incurred due to the breach of contract.

Templates available (free to use)

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What is an Assignment and Assumption Agreement: Everything You Need to Know

An assignment and assumption agreement is an agreement for transferring contractual duties and rights. 3 min read updated on January 01, 2024

“What is an assignment and assumption agreement?” is a question that you may find yourself asking if you intend to end your involvement in contract by letting another person step into your shoes. An assignment and assumption agreement is an agreement for transferring contractual duties and rights. It is a separate agreement from the one being transferred. The original contract may contain certain terms and conditions regarding assignments and assumptions, so it is important for the parties involved to review the contract carefully before proceeding with the transfer.

What Is an Assignment and Assumption Agreement?

Also referred to as an assignment and assumption, an assignment and assumption agreement is an agreement that is established when one party of a contract wishes to transfer his or her  contractual obligations and rights to another party. The party who is transferring his or her rights is called the assignor, while the one receiving them is known as the assignee.

In some situations, an assignor will not be completely released from liability even after he or she has assigned the contract. The parties should look closely at the specific language in the contract to determine the restrictions and terms that apply to assignments and assumptions. An agreement for an assignment and assumption is a document that is separate from the contract it transfers.

Reasons for Creating an Assignment and Assumption Agreement

After two parties  enter into a contract , a change in business climate, one party's equity, or other factors may make it necessary to assign the contract. If both parties agree to the assignment and sign the necessary documents to transfer existing duties and interests, an agreement may be assigned to and assumed by another party.

A business may lose its foothold in the marketplace or one of contracting parties may fail to perform its contractual obligations due to changing local laws. Instead of leaving parties bound to an irrelevant or  dated agreement , an assignment makes it possible for struggling or incapable parties to be replaced with parties that are more capable of responding to the requirements and goals of the contract. The process of assignment itself enables the parties to continue a dialogue, which can help develop and solidify a successful business relationship.

A Guide to Creating an Assignment and Assumption Agreement

Sometimes, a contract may have specific rules regarding what type of assignment is permitted, who can receive the assignment, and how the assignment should be processed. It is essential that you read the original contract to ensure that all contracting parties have met all the requirements for assignments and assumptions. Each party should be given enough time to review both the initial agreement and the assignment. This will help prevent the situation where one party claims that he or she does not understand the terms and their effect on the agreement or his or her rights and duties.

In addition, you and the other party should carefully review the assignment to make sure that it includes all relevant deal points. Avoid assuming that both parties have agreed to certain terms or expectations even if they are not clearly stated in the document. It is better to over-include than under-include terms in the agreement. Since the terms of the initial agreement are still effective, both parties should continue to fulfill their contractual obligations until the assignment is signed and completed.

Three copies of the assignment and assumption agreement must be signed: two for the initial contracting parties and one for the assignee. Your copy of the signed assignment agreement should be kept with the original agreement. Once the assignment is created and signed, it will become part of the initial contract and should be treated as such. Depending on the  terms of the agreement , you may want to have the assignment witnessed or notarized. By doing so, you can avoid the situation where someone challenges the validity of a signature.

What to Include in an Assignment and Assumption Agreement

An assignment and assumption agreement can be written in many different ways. In many instances, such an agreement includes the following:

• Names of assignor and assignee
• Whereas clause stating that both assignor and assignee have agreed to the assignment
• Statement of assignment
• Statement of assumption
• Effective date of assignment
• Statement about future transfers and assignments to permitted successors
• Declaration that the agreement can be executed in counterparts
• Statement confirming the presence of witnesses
• Signatures of the assignor and assignee

If you need help drafting an assignment and assumption agreement, you can  post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Haida agreement marks seismic shift in B.C. reconciliation efforts

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In 2014, the Supreme Court of Canada legally recognized 1,750 square kilometres of Crown land southwest of Williams Lake as Tsilhqot’in First Nation Aboriginal title land. It represented about two per cent of traditional Tsilhqot’in territory.

Ten years later, on April 22, British Columbia’s NDP government introduced a bill to recognize Haida Nation Aboriginal title over 100 per cent of Haida-claimed territory, which represents all of Haida Gwaii’s approximate 10,000 square kilometres.

“For years, we’ve envisioned and worked towards re-establishing an economy that aligns with our values and traditions,” said Haida Nation President Gaagwiis Jason Alsop when the agreement was announced. “We can now take hold of that vision and create a future where the land and sea will nurture us for generations to come.”

Bill 25, the Haida Recognition Amendment Act—otherwise known as the Rising Tides Haida Title Lands Agreement—has been met with questions about what Aboriginal title will mean for Crown resources, parks and private properties on Haida Gwaii.

The agreement states fee simple interests will be “honoured” and will continue under provincial jurisdiction. But Aboriginal law experts are divided on the question of how private fee simple lands can co-exist in a region where Aboriginal title exists.

There are also questions with respect to jurisdiction over parks and other Crown resources, and answers to those questions will reportedly be worked out over the course of a transition period. What will become of Naikoon Provincial Park on Haida Gwaii, for example, is one such question.

“I think there will likely be discussions with the Haida around how the parks are ultimately managed,” B.C. Environment Minister George Heyman told BIV .

“But they’ve given no indication that they want to change the fundamental nature of these being parks that are accessible,” he said. “We have a couple of other examples of First Nations where we reached reconciliation agreements, and part of the agreement was to give the nation essentially title over the park, but part of the agreement was that they continue to be operated in much the same way they have in the past.”

Agreement avoids having the courts decide title

Haida Gwaii’s geographic isolation makes it unique in B.C. No one contests the Haida Nation’s continuous and exclusive occupation of Haida Gwaii. Nor do the nation’s claims overlap with the claims of other nations—as is often the case with many other First Nations—so the Haida appear to have an even stronger case for proving title than did the Tsilhqot’in.

What has raised questions and concerns was Premier David Eby suggesting that this settlement agreement could become a template for other First Nations, and that it might serve as an alternative to formal treaty negotiations.

Asked by IndigiNews if the Haida approach could replace the treaty negotiation process, Eby said: “I think for some nations, this would be a preferable approach.”

What, then, is the approach?

“Premier Eby’s musing about the Haida agreement being a template suggests everyone in B.C. should ponder how this arrangement could affect them, if something similar is implemented where they live,” B.C. economist Jock Finlayson and lawyer Mary MacGregor recently wrote in a joint analysis for the Fraser Institute.

In an interview with BIV , Minister of Indigenous Relations and Reconciliation Murray Rankin qualified the premier’s remarks, saying he had said it was a “template for the art of the possible.”

“The circumstances in Haida Gwaii are unique. Whether those can be replicated elsewhere will be determined over time,” Rankin said.

The law firm Fasken has noted the bilateral agreement between B.C. and the Haida “is a first-of-its-kind negotiated agreement that is not a treaty, but rather part of a reconciliation process, making its nature and effect legally uncertain.”

It also suggests that the agreement could create expectations among other First Nations seeking similar recognition.

“However unique the province may claim Haida is, other Indigenous governments will likely demand the same type of agreement,” Fasken noted.

Other recent decisions on the reconciliation front could add to concerns that the B.C. government—guided more by a United Nations declaration than by existing Canadian legal principles—may be willing to abridge the rights of non-Aboriginal citizens when trying to address and redress the rights of First Nations.

Three days after the Haida Title Agreement was introduced, B.C.’s Ministry of Environment announced it would close the popular provincial park Joffre Lakes to the general public for several weeks this year for the exclusive use of First Nations.

And earlier this year, the B.C. government came under fire for planned amendments to the Land Act that were intended to bring it in line with the Declaration on the Rights of Indigenous Peoples Act (DRIPA).

The government moved to change the act to include consent-based agreements that would give First Nations co-decision-making powers with respect to land use in B.C.

The way in which the government rolled out the Land Act amendment process, without much transparency or forewarning, caused a backlash that forced the province to press pause on the initiative.

It is DRIPA—implemented in 2019—that some critics to point to when questioning some of the B.C. government’s recent initiatives.

“It was unclear at the time what it would mean for government policy, law and administrative practice in the future,” MacGregor and Finlayson write.

“But we’re beginning to see how B.C. policymakers plan to advance the goal of ‘reconciliation’ with Aboriginal peoples following the adoption of UNDRIP several years ago.”

Robin Junger, an Aboriginal law expert with McMillan, has criticized DRIPA and the United Nations Declaration on the Rights of Indigenous People (UNDRIP), on which it is based. He said Canadian law—Supreme Court of Canada rulings and Section 35 of the Constitution—provide all the guidance necessary for balancing Aboriginal and non-Aboriginal rights.

“The UN declaration does not require a balancing of interests like Canadian law does,” he said.

B.C.’s official opposition party BC United, which voted in favour of implementing DRIPA in 2019 and in favour of the Haida Recognition Act last year—called for the Haida Recognition Amendment Act (Bill 25) to be deemed an exposure draft, which would mean halting it at first reading until after the provincial election in October.

When Bill 25 was given first reading, there were only five weeks left in the B.C. Legislative session, and less than five months until the provincial election, said Michael Lee, BC United shadow critic for Indigenous relations and reconciliation.

“This is not the time to be doing this kind of fundamental change,” he said. “We need greater transparency, consultation and engagement.”

Can private land exist within Aboriginal title land?

In 2002, British Columbians who voted in a referendum on treaty negotiations made it clear they felt neither parks nor private lands should be on the table when negotiating modern treaties with First Nations.

It is unsurprising, then, that one of the biggest concerns about the Haida Title Lands Agreement is what it means for private landowners if the entirety of Haida Gwaii comes under Haida title and governance.

The Aboriginal law teams at two law firms—Cassels and McMillan—suggest Aboriginal title and fee simple land cannot co-exist.

Even the B.C. government’s own lawyers have characterized the notion of fee simple and title land co-existing an “absurdity.”

“The existing authority, which is approved by the Supreme Court of Canada, is the notion of Aboriginal title and fee simple title co-existing is an ‘absurdity,’” said one of the lawyers acting on behalf of the province during 2017 proceedings in the Haida-versus-B.C. case.

Aboriginal title land, as defined by the courts, is communal in nature.

“The rights in land which flow from both a fee simple interest and Aboriginal title interest (which is constitutionally defined and protected) include exclusive rights to use, occupy and manage lands,” writes Tom Isaac and Mackenzie Hayden at Cassels. “The two interests are fundamentally irreconcilable over the same piece of land.”

Merle Alexander, an Indigenous resource lawyer at law firm Miller Titerle, disagrees. He said the Haida Title Agreement resolves this conflict by simple agreement to allow private land to continue under provincial jurisdiction.

“It’s so glaringly clear that fee simple land rights are being protected,” he said. “It’s almost as if this idea comes from not even reading [the bill].

“I think the agreement itself actually tries to give greater certainty to fee simple holders, because the courts really haven’t given us a lot of guidance on this. I think, if you negotiate the actual framework, and you expressly and directly deal with fee simple interests, I think there’s much greater certainty to negotiated language.”

Geoff Plant, who was attorney general and treaty minister under the Gordon Campbell government, also said the agreement itself is quite clear on the protection of private, fee simple lands.

The Haida Title Lands Agreement itself states that: “The Haida Nation consents to and will honour fee simple interests, including those held by Haida citizens,” and that “the Haida Nation consents to fee simple interests on Haida Gwaii continuing under British Columbia jurisdiction.”

“It would be difficult to be any clearer than this,” Plant has written.

“You don’t need to be a lawyer to read plain English. To argue that this agreement somehow threatens fee simple property rights on Haida Gwaii is to misread the agreement.”

Rankin told BIV that 2.2 per cent of Haida Gwaii is fee simple land, and half of it is owned by the company Mosaic Forest Management.

“We’ve had many conversations with the mayors of the three main communities, and I can tell you there is an understanding that fee simple is not—repeat, not—on the table. It’s protected in perpetuity.”

But even if First Nations consent to honour fee simple lands, McMillan warns that private landowners may still be affected by how First Nations use their title and governance powers.

“Will the Haida Nation’s ability to regulate uses of private fee simple land be similar to local government’s zoning powers?” McMillan asked in its analysis. “If so, how will this reconcile with the local government powers? Will it matter that non-Haida residents cannot vote in Haida elections?”

McMillan pointed out that, while 95 per cent of the Haida approved of the Haida Title Agreement in a referendum, non-Haida citizens on Haida Gwaii were given no similar referendum vote.

“The government would be wise to answer the questions raised by Bill 25, instead of dismissing those who are posing them,” McGregor and Finlayson wrote.

“The province also needs to get serious about the difficult but necessary process of engaging in consultation and substantive dialogue with non-Aboriginal British Columbians on the broader push for reconciliation. Because B.C. is out there alone, nearing a point of no return on its fast-moving reconciliation agenda, one should not underestimate the harm that mismanaging these issues may cause.”

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UK/New Zealand: Agreement on Mutual Recognition in Relation to Conformity Assessment [TS No.29/2024]

This treaty was presented to Parliament in May 2024.

UK/New Zealand: Agreement on Mutual Recognition in Relation to Conformity Assessment

Ref: ISBN 978-1-5286-4921-6, CP 1082

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Published title: Published title: Agreement on Mutual Recognition in relation to Conformity Assessment between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of New Zealand.

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