The difference between a Deed of Assignment and a Deed of Contract

Ever wondered about the difference between a Deed of Assignment and a Deed of Contract? Let's unravel the distinctions.

In Nigeria, when buying or selling property, we use two key documents which are the Contract of Sale and the Deed of Assignment.

While they're both part of real estate deals, their unique features and roles in securing ownership of property help distinguish them.

The Contract of Sale is a legal document that outlines the buyer and seller's respective rights and obligations. They discuss and agree on the terms at the start of the transaction, and this document is where those terms are written down. It's like the blueprint for transferring the property.

On the flip side, the Deed of Assignment serves a different purpose. It's the official document used in transferring ownership from the seller (called assignor) to the buyer (called assignee).

In simple terms, the Contract of Sale sets the deal's terms, while the Deed of Assignment seals the deal by transferring ownership. Both are crucial in making sure property transactions are clear and legally sound.

Here are 10 significant distinctions between a Contract of Sale and a Deed of Assignment:

The purpose of the Documents

A Contract of Sale is the initial agreement in a real estate transaction, detailing the negotiated terms between the buyer and seller. In contrast, a Deed of Assignment serves as the official record confirming the transfer of property ownership. It acts as evidence that the property has officially moved from the seller (assignor) to the buyer (assignee). Rather than being a document for negotiation, it is the final step in the transfer process.

Legal Implications

A Contract of Sale lays out sale terms and conditions without directly addressing property ownership in legal terms. It mainly outlines each party's responsibilities.

In contrast, the legal importance of the Deed of Assignment is significant. It only holds legal weight if properly registered and stamped requiring strict adherence to the law. Adhering to legal procedures is crucial to ensure the lawful transfer of property ownership. Violating these procedures could result in disputes.

The Content

Their contents differ because their goals differ as well. A Contract of Sale includes specifics regarding the price of the property. These are the agreed timetable for payments, any unique terms that have been worked out between the parties, and a description of the property.

In contrast, a Deed of Assignment contains a thorough description of the property being transferred along with details about the buyer (assignee) and the seller (assignor). Additionally, it outlines the conditions of the transfer and makes it very evident that the buyer will now be the owner.

Proof of Ownership Transfer

Although it lays out the conditions for a possible transfer, a contract of sale does not transfer ownership of the property. On the other hand, a Deed of Assignment formally changes ownership of real estate. The buyer will become the property’s legal owner upon execution of this agreement, and the transfer will be final.

Registration

You don’t necessarily need to register the Contract of Sale. However, some parties might opt for it. Conversely, it is essential to properly register and stamp the Deed of Assignment with the appropriate government bodies. The registration process legally affirms the transfer of the property.

Enforceability

The Contract of Sale cannot be enforced in court if one party breaches the agreed terms. Its primary goal is to regulate the terms of the agreement and resolve disputes regarding these terms.

The Deed of Assignment, on the other hand, ensures the buyer’s ownership rights are legally protected and enforceable.

Transfer of Liabilities

The transfer of responsibilities or liabilities relating to the property is usually not covered by the Deed of contract. The selling’s conditions and terms are its main focus. However, a Deed of Assignment might enable the seller to assign debts, like real estate taxes, to the buyer. Specific property related duties may also be assigned to individuals in this document.

Public Access

A contract of sale is not open to the public. It is usually a private contract between the buyer and the seller. On the other hand, once you record a Deed of Assignment, it becomes a public record. Anyone that has an interest in the document, including government organizations and prospective buyers can view this record to verify the rightful owner of the property.

Impact on Property Rights

Although it establishes the foundation for future property rights upon execution, a Contract of Sale does not legally directly affect property rights. You can alter property rights through the use of a Deed of Assignment. This gives the buyer total authority over the property and transfers all ownership rights from the seller to the buyer.

While a Contract of Sale sets the groundwork for future property rights, it doesn't directly impact them in a legal sense. On the other hand, a Deed of Assignment can alter property rights, granting the buyer full authority and transferring all ownership rights from the seller to the buyer.

Negotiation vs. Finalisation

The main objectives of a contract of sale are discussion and compromise. It is the contract that specifies the terms and circumstances of the sale of property between the buyer and seller.

A Deed of Assignment, on the other hand, signifies that the transaction is complete. This marks the end of the negotiation process and the buyer’s formal ownership of the property.

As we've delved into the variances, the success of real estate deals depends on your ability to spot these differences. The Contract of Sale sets the terms of the agreement, while the Deed of Assignment marks the official conclusion of the ownership transfer.

Understanding these distinctions empowers you to make informed decisions whether you're settling on terms, finalising a contract, or seeking clarity.

Are you in search of genuine properties, be it land or homes in Lagos, feel free to reach out via contact or drop an email at [email protected]. I'm here to help you navigate your property ownership journey in Nigeria.