An individual or firm that takes the
right or title of another by assignment. The
assignee’s rights are found in common law,
however, provincial statutes may impact such
rights, e.g., tenancies and mortgages. In
residential tenancy legislation for example,
landlords cannot typically refuse an
assignment on an arbitrary or unreasonable
basis.
Example of Assignee
Thompson is actively involved in
mortgage investments. McKay is the mortgagee
for a first mortgage in the amount of
$25,000 bearing interest at 8% and due in
four years. McKay prefers to have the cash
and wishes to assign all rights under the
mortgage to Thompson in return for a cash
payment. Accordingly, Thompson pays McKay
$21,000 for the mortgage and McKay signs
over all rights.
An individual or firm who transfers or
assigns rights or title to another. The
assignor’s rights are found in common law,
however, provincial legislation may impact
such rights, e.g., tenancies and mortgages.
The transfer of rights in a contract,
usually in writing, to another party. The
general rule of law is that all contracts
are assignable with certain rare exceptions,
e.g., personal service contracts are not
generally assignable.
A frequent assignment situation in real
estate involves mortgages. The original
mortgagee, may decide to sell the mortgage
to another lender by way of an assignment
document. This transfer assigns the
registered mortgage as well as all rights to
collect outstanding amounts due under the
mortgage. The amount payable for an
assignment will vary depending on how
favourable the terms of the original
mortgage are in comparison with market
conditions at point of sale.
If the current rates are higher than the
stated rate on the mortgage, then the
mortgagee will probably have to discount the
mortgage face value to make the offering
attractive to potential assignees. The
discount has the net effect of raising the
overall yield. Conversely, an investor might
pay additional monies to the mortgagee if
the mortgage has an interest rate
substantially higher than current rates.
As a general rule, liabilities under a
contract cannot be assigned by the party
obligated, so as to compel the other party
to accept performance by an unrelated third
party. However, liability can be assigned if
there is express consent or an implied
intention of the parties to permit the
assignment. The courts may hold that such an
intention was implied if the obligation does
not involve a special personal
qualification, and if it was immaterial that
the obligation was performed by someone
other than the person originally liable.
Rights, as opposed to liabilities, under
a contract can generally be assigned except
where, for reasons of confidence between the
parties or personal qualifications, such
action would increase or change the
obligations. For example, in a seller
take-back mortgage, the court will not imply
an intention to permit an assignment without
the consent of that seller.
An assignment may also occur in an
agreement/contract involving the sale of
real estate. If a buyer contemplates the
assignment of rights to a corporation or
other party prior to closing, a possible
clause in the agreement/contract might be:
The buyer shall
have the right at any time prior to closing,
to assign the written offer to any person,
persons or corporation, and upon delivery to
the seller of notice of such assignment,
together with assignee's covenant in favor
for the seller to be bound hereby as a
buyer, the buyer hereinbefore named shall
stand released from all further liability
hereunder.
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