Glossary

Assignment Clause

Also known as: assignability provision

The PSA provision governing whether, and under what conditions, the buyer may transfer its rights and obligations under the contract to another entity — most commonly an affiliate, JV vehicle, or 1031 exchange accommodator — before closing.

Institutional buyers routinely negotiate a broad assignment right, since the entity that signs the PSA during underwriting is often a placeholder that will be replaced before closing by the actual acquisition vehicle formed for tax, financing, or joint-venture reasons; sellers typically permit assignment to affiliates without consent but require approval, not to be unreasonably withheld, for assignment to unrelated third parties, to guard against unauthorized contract flipping. A clause silent on assignment defaults to the jurisdiction's general contract law, which often permits assignment unless expressly prohibited, so sophisticated sellers address it explicitly rather than relying on default rules. Assignment provisions also interact with 1031 exchange mechanics, since a qualified intermediary typically needs to be inserted into the chain of title via an assignment of the buyer's or seller's contract rights.