An assignment and assumption agreement transfers one party's rights and obligations under a contract to another party. The party transferring her rights and duties is the assignor; the party receiving them is the assignee. Sometimes, an assignor is not completely relieved of liability even after she assigns a contract. Parties must look to a contract's specific language to determine applicable restrictions, terms and conditions for assignments and assumptions.
Assignment and Assumption
An assignment and assumption is a separate document from the contract it transfers. For example, George leases his house to Cindy for one year. The lease states that she may assign it with George's approval. George consents to Ralph assuming the lease. Cindy and Ralph must draft and sign an assignment and assumption as assignee and assignor. Lenders sometimes allow original borrowers to assign outstanding loan debt to creditworthy third parties. Typically, Veteran's Administration and Federal Housing Administration loans are more likely to be assumable than conventional loans.