Third-Party Buying Advice: What You Need to Know
Save your money and be smart!
As your investment profile grows higher and higher, you’ll find that assigning a home to a family member, spouse, or good friend could be a definite bonus to your overall net worth. Especially in a rising real estate market where you can resell the property at a higher price before the completion date. Since half of the property’s value is added to your net worth, depending on which tax bracket you fall into, a third-party purchase may be necessary. In this situation, it is important that you do not use “I nominee” in your contract. But be direct with the name of who the buyer is.
The general rule is that a buyer can assign his rights under the contract as long as it does not prejudice the rights of the seller. The seller must know who the buyer is. However, if the seller does not consider that his rights are affected, he can give his consent so that the transfer of identity is not required. This as long as he has written notification of the assignment. Both buyers and sellers should receive copies of this from their real estate agent.
If you are still debating whether or not to have an assignment sale or a third party as property, then you can impute a temporary clause to give you a few extra days to contact your assignee or third party to request their permission. Your real estate agent will insert an “Assignment Option Clause” which should read something like the following sample clause:
“Buyer reserves the right to assign this contract in whole or in part to any third party without notice to Seller; such assignment does not relieve Buyer of its obligation to abide by the terms and conditions of this contract in the event Buyer assignee by default.”
Of course, this is just a sample of what a real estate agent MAY use and should not be taken as a clause without first contacting your attorney. When buying, always remember the issues that affect the interest of the owners. You have to keep your eyes on the road. Rights-of-way, right-of-way, or road widening may not have been surveyed or recorded. Causeways and culverts may not have been built on any public road without the permission of the Ministry of Transport. Permission could also be denied due to limited access roads.
Additionally, when building near streams, rivers, oceans, lakes, and cliffs; be sure to check their restrictions. You may find that the property you are buying will dwindle before your very eyes in a matter of months. This applies to all real property on the Fraser Valley market and all other real property in British Columbia. These tips may be useful in other Canadian provinces such as Calgary, Alberta. Again, this should not be taken as legal advice, but simply as a guide for your next real estate investment.
