Turn on the TV or go online and you will see countless news stories about “Shadow Flipping” in Vancouver BC. It is a scary thing for some homeowners. Nobody want’s to have their property flipped for profit before the sale even completes. In some cases the “flipper” can make hundreds of thousands of dollars in a matter of days. So how do you protect yourself from the “shadow flipping” as a seller?
By default every Contract of Purchase and Sale has an “assignment clause” in it. The “assignment clause” is the clause investors abuse to assign/sell contracts for profit. The general rule, in the absence of wording in the contract to the contrary, is that BUYERS MAY ASSIGN their rights under the contract as long as they do not prejudice the rights of the sellers. For example, if the sellers are carrying the mortgage, they may not want the contract to be assigned to another party.
If you are concern about “shadow flipping” and want to protect yourself just add a simple clause in your Contract of Purchase and Sale. This will eliminate the assignment clause and thus eliminate the ability of anyone to assign (or sell) the contract to a third party.
Here is an example of the no assignment option clause:
“No Assignment Option Clause
The Buyer agrees not to assign this contract in whole or in part to any third party.”
That’s it! Now you can sell your property without worrying about anyone trying to flip it before the completion date. Feel free to contact me with questions about selling your property (house or a condo) in the Greater Vancouver area.
DISCLAIMER: Seek independent legal advice before implementing any of the idea discussed in this article.