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Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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Assignment Law: Everything You Need to Know

In legal terms, the meaning of an assignment is a contractual obligation to transfer a property title or right from one party to another. 3 min read updated on February 01, 2023

The term assignment law is used in the law of real estate and in the law of contracts. In both instances, it relates to the transfer of rights held by one party (the assignor) to another party (the assignee).

Assignment Law

In legal terms, the meaning of an assignment is a contractual obligation to transfer a property title or right from one party to another. Generally, the assignment is transferred based on an entire interest in the property, chattel, estate, or other item assigned.

A grant is different from an assignment in that an assignment refers to the right to transfer the property. This is considered an intangible right. On the other hand, the grant is concerned about the physical transfer of property. This is a tangible right. For example, a payee can assign their rights to collect a note payment to a bank. 

The terms of the contract must be analyzed to determine if the right of assignment is prohibited. For example, a property owner may allow a lease to be assigned, ordinarily along with an assumption agreement, where the new tenant is now responsible for the payments and duties of the lease.

The holder of a trademark may transfer it, either by giving or selling their interest in the trademark to another party. This is referred to as an assignment. The party that receives the benefit is called the assignee. Once transferred, the assignee has the ability to exclude others from using their trademark.

In order for the assignment to be enforceable, it must be in writing and have the goodwill of the company attached to the mark. For an assignment to be effective, it must contain the fundamental aspects of a contract, such as:

• Parties with legal capacity
• Legality of object
• Consideration consent

A contract assignment occurs when a party assigns their contractual rights to a third party. The benefit the issuing party would have received from the contract is now assigned to the third party. The party appointing their rights is referred to as the assignor, while the party obtaining the rights is the assignee. Essentially, the assignor prefers that the assignee reverses roles and assumes the contractual rights and obligations as stated in the contract. Before this can occur, all parties to the original contract must be notified.

How Assignments Work

The specific language used in the contract will determine how the assignment plays out. For example , one contract may prohibit assignment, while another contract may require that all parties involved agree to it before proceeding. Remember, an assignment of contract does not necessarily alleviate an assignor from all liability. Many contracts include an assurance clause guaranteeing performance. In other words, the initial parties to the contract guarantee the assignee will achieve the desired goal.

When Assignments Will Not Be Enforced

The following situations indicate when an assignment of a contract is not enforced:

• The contract specifically prohibits assignment
• The assignment drastically changes the expected outcome
• The assignment is against public policy or illegal

Delegation vs. Assignment

Occasionally, one party in a contract will desire to pass on or delegate their responsibility to a third party without creating an assignment contract. Some duties are so specific in nature that they cannot be delegated. Adding a clause in the contract to prevent a party from delegating their responsibilities and duties is highly recommended.

Three Steps to Follow if You Want to Assign a Contract

There are three main steps to take if you're looking to assign a contract:

• Make sure the current contract does not contain an anti-assignment clause
• Officially execute the assignment by transferring the parties' obligations and rights
• Notify the obligor of the changes made

Once the obligor is notified, the assignor will effectively be relieved of liability.

Anti-Assignment Clauses

If you'd prefer not to allow the party you're doing business with to assign a contract, you may be able to prevent this from occurring by clearly stating anti-assignment clauses in the original contract. The three most common anti-assignment clauses are:

• Consent required for assignment
• Consent not needed for new owners or affiliates
• Consent not unreasonably withheld

Based on these three clauses, no party in the contract is allowed to delegate or assign any obligations or rights without prior written consent from the other parties. Any delegation or assignment in violation of this passage shall be deemed void. It is not possible to write an anti-assignment clause that goes against an assignment that is issued or ordered by a court.

If you need help with assignment law, you can  post your job  on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. 

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• Assignment Of Contracts
• Delegation vs Assignment
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Assignment is a legal definition that refers to the transfer of rights, property, or other benefits between two parties. The party allocating the rights is known as the “assignor”, while the one receiving them is called the “assignee”. The other original party to the contract is known as the “ obligor ”.

A burden, duty, or detriment cannot be transferred as an assignment without the agreement of the assignee . Furthermore, the assignment can be carried out as a gift, or it may be paid for with a contractual consideration .

Keep reading to learn how this important legal term is used both in contract and property law and to see relevant examples.

• Assignment Examples

A common example of assignment within property law can be seen in rental agreements between landlords and tenants. For example, a tenant may be renting from a landlord but wants another party to take over the property . In this scenario, the tenant may be able to choose between assigning the lease to a new tenant or subleasing it.

If assigning it, the new tenant will be given the entire balance of the term, with no reversion to anyone else being possible. In other words, the new tenant would have a legal relationship with the landlord. On the other hand, if subleasing the property, the new tenant would be given a limited term and no legal responsibility towards the property owner, only towards the original tenant.

Another example of assignment can be seen within contract law . Let’s say that a school hires a piano teacher for a monthly employment contract with a salary of $2000 per month. As long as there is consent from all parties, the teacher could assign their contract to another qualified piano instructor.

This would be an assignment both of the piano teacher’s rights to receive $2000 per month, and a delegation of their duty to teach piano lessons. This illustrates the fact that under contract law, assignment always includes a transfer of both rights and duties between the parties. If a breach of contract is made by either party, for example for defective performance, then the new teacher or the school can sue each other accordingly.

• Legal Requirements for Assignment

For an assignment to be legally valid, it must meet certain requirements . If these are not met, a trial court can determine that the transfer of rights did not occur. The legal requirements for assignment are as follows:

• All parties must consent and be legally capable to carry out the assignment.
• The objects, rights, or benefits being transferred must be legal.
• The assignment is not against public policy or illegal.
• Some type of consideration is included if necessary.
• The contract in question must already be in place and doesn’t prohibit assignment.
• If a duty is being transferred, and it requires a rare genius or skill, then it cannot be delegated.
• The assignment doesn’t significantly change the expected outcome of a contract.
• Assignment Steps

To successfully assign a contract, certain steps must be followed to ensure the process is legally valid. The necessary assignment steps are listed below:

• Ensuring there is no anti-assignment clause in the contract.
• Executing the assignment by transferring the obligations and rights to a third party.
• Notifying the obligor of the transfer, which in turn relieves the assignor of any liability.
• Avoiding Assignment

In certain situations, one of the two parties may not want to allow their counterpart to assign the contract. This can be prevented by setting anti-assignment clauses in the original contract. An example of this is making it necessary for prior written consent to be attained from the other parties before the assignment is approved. Nevertheless, an anti-assignment clause cannot be included in an assignment that was issued or ordered by a court.

• Assignment vs. Novation

Novation occurs when a party would like to transfer both the benefits and burden of a contract to another party. This is similar to assignment in the sense that the benefits are transferred, but in this case, the burden is also passed on. When novation is finalized, the original contract is deleted and a new one is created, in which a third party becomes responsible for all the obligations and rights of the original contract.

• Assignment vs. Delegation

Although delegation and assignment are similar in purpose, they are two different concepts. Delegation refers to transferring the obligation to a third party without an assignment contract . While in assignment an entire contract and its rights and benefits can be passed on, in delegation only a particular contractual task or activity is transferred.

Let’s look at an example . Lisa is a homeowner that wants to hire Michael with an independent contractor agreement to remodel her garage. He plans to do all the work himself, but he’s not a painter, so he wants to delegate the painting work to his friend Valentina.

In this example, the contract is between Lisa, the obligor, and Michael, the delegator. Valentina would then be known as a delegatee, she doesn’t assume responsibility for the contract nor does she receive the contractual benefits, which in this case would be monetary compensation. However, Michael may have a separate agreement with Valentina to pay her in return for her work.

It’s also important to note that some duties are so specific in nature that it’s not possible to delegate them. In addition, if a party wants to avoid delegation , it’s recommended to add a clause to prevent the other party from delegating their duties.

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The Law of Assignment (3rd Edition)

Marcus smith, nico leslie.

This book is the leading text on the law relating to intangible property or choses in action. Its clear and approachable structure covers all forms of intangible property (debts, rights under contract, securities, intellectual property, leases, rights/causes of action, and equitable rights), considering the nature of intangible property, how it comes into being, and how it is transferred or assigned. The first part of the book analyses the general principles regarding intangibles and their transfer, and the second examines the practical considerations relating to particular types of intangibles, securities, insurance contracts, leases, and intellectual property under the law. This new edition includes new chapters on powers of attorney and factoring, areas particularly important to legal practice. Other significant developments include the expansion of the chapter on leases to include leasing of chattels, and more material on securities, especially regarding the operation of settlement systems.

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Nico Leslie, author

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• Foreword to The Third Edition
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Understanding the Law of Assignment

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The practical importance of intangible personalty such as debt, bonds, equities, futures, derivatives and other financial instruments has never been greater than it is today. The same may be said of interests in intellectual property. Yet the assignment of these intangible assets from one to another remains difficult to understand. Assignments are often taken to operate as a form of transfer akin to conveyances of legal titles to tangible personalty. However, this conception does not accurately reflect the law of assignment as it has developed in the caselaw in England and Wales. This book sets out a different model of the workings of assignments as a matter of English law, one that provides an analytical, yet historically sensitive, framework which allows us to better understand how, and why, assignments work in the way the cases tell us they do.

‘Chee Ho Tham has here produced a remarkably well-written, erudite and thoroughly informative work, and in addition a very distinct accretion to the scholarship on assignment. I recommend it without hesitation to commercial and obligations lawyers alike.’

Andrew Tettenborn Source: Lloyd's Maritime and Commercial Law Quarterly

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Understanding the Law of Assignment - Title page pp iii-iii

Copyright page pp iv-iv, contents pp v-viii, foreword pp ix-x, preface pp xi-xiv, cases pp xv-xxxii, legislation pp xxxiii-xl, abbreviations pp xli-xlvi, part i - introduction pp 1-30, 1 - introduction pp 3-15, 2 - a conceptual account of equitable and statutory assignments pp 16-30, part ii - the model pp 31-150, 3 - invariability pp 33-66, 4 - different models of equitable assignment pp 67-105, 5 - misconceptions pp 106-126, 6 - combination pp 127-150, part iii - joinder pp 151-202, 7 - joinder of assignor in equitable proceedings pp 153-170, 8 - joinder of assignor in common law proceedings pp 171-178, 9 - non-joinder of assignor of legal choses pp 179-202, part iv - notice pp 203-324, 10 - giving notice of equitable assignments and its effect on competing assignees: the ‘rule’ in dearle v. hall pp 205-245, 11 - knowledge of assignment: substantive effects in equity between obligor and assignor pp 246-280, 12 - knowledge of assignment: procedural avoidance in equity and by statute of ‘equities’ or ‘defences’ pp 281-324, part v - statutes pp 325-410, 13 - ‘statutory’ assignments under law of property act 1925, section 136(1) pp 327-387, 14 - statutory dealings in specific classes of intangible assets pp 388-410, part vi - consequences pp 411-455, 15 - why it matters pp 413-455, altmetric attention score, full text views.

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Notes, cases, and materials on land law

Topic notes.

Past Papers

Back to Subjects | Back to Law

Definition and rights

Inroduction

Rights in unregistered land

Land charges registration

Statutory overreaching

Introduction

The registered regime

Effect on Disponees

Overriding interests

The 'restriction'

Lease/Licence distinction

Content requirements

Joint tenancy and tenancy in common

Shared equitable ownership

Purchase money resulting trusts

Common intention constructive trusts

Proprietary estoppel

Enforcing the covenant

Passing the burden of the covenant

Passing the benefit of the covenant

Enforcing the burden of positive covenants

Discharge and modification of restrictive covenants

Forms the subject matter of a grant

Express and Implied Easements

The effect of Easements on disponees

General cases

Past Papers & Questions

1. “The minimum equity principle requires that, in fashioning a remedy to give effect to proprietary estoppel, the court must go no further than is necessary to prevent detriment.” (Robertson, ‘The Reliance Basis of Proprietary Estoppel Remedies’ [2008] Conv 295). Critically discuss.

2. “The remedies available to the mortgagee are too extensive and do not accord with the economic realities of the twenty-first century. Immediate reform is required.” Critically discuss.

3. “The rules determining the existence of a ‘common intention’ constructive trust of the home, and the rules determining the shares held by the beneficiaries of such a constructive trust, are too uncertain”. Critically discuss.

4. “The new regime for adverse possession in registered land implemented through the LRA 2002 adopted a clear moral view on ‘advertent squatters’, as the prospect that the urban squatter could acquire the title to land automatically, on the expiry of the limitation period, was deemed to be inherently unfair.” (Neil Cobb and Lorna Fox, ‘Living Outside the System? The (im)morality of Urban Squatting after the Land Registration Act 2002’, Legal Studies 27(2) 2007). Discuss

5. ‘Critically evaluate whether Schedule 3 of the Land Registration Act 2002 does ensure, and whether it should ensure, that rights binding a disponee are readily discoverable by them.

6. If Parliament were to review the contents of Schedule 3 of the Land Registration Act 2002, by what principles should it be guided? If your proposed principles were adopted, what are the main changes (if any) that would need to be made to those contents?

7. Has the Supreme Court’s decision in Jones v. Kernott [2011] regarding the informal acquisition of beneficial interests in family homes left that area of the law in a satisfactory condition?

Abigail is the registered proprietor of the freehold title to Oxford House, a large plot of land with a 4-bedroom house and a 2-bedroom cottage in its grounds. The cottage has a bathroom and kitchen, but lacks a sitting room. Until now she has lived in the house and rented the cottage on short-term holiday lets, but as her employer is relocating her to New York indefinitely she decides to rent both the house and cottage on a longer-term basis.

On 30th August 2016 Abigail enters into a written agreement with Betty, signed by both parties, giving Betty the right to exclusive possession of the house in return for market rent of £1500 per calendar month. The agreement provides for each party to terminate the agreement by providing the other with one month’s notice to quit. Betty moves in on the same day.

Also on 30th August 2016 Abigail confers on Connor and Darren, two students at the local university, the right to occupy the cottage from 1st September 2016 until 1st July 2017 (the date on which they complete their studies). Connor and Darren tell Abigail how glad they are to have found her cottage, having searched for a suitable 2-bedroom property for a few months. Abigail enters into an agreement with Connor, signed by both Abigail and Connor, and another in identical terms with Darren, signed by both Abigail and Darren. In recognition of the fact that Connor and Darren are students, Abigail rents them the property at 60% of its market value. Clause 3 of the agreement provides that Abigail can introduce another occupant into the cottage. Clause 4 provides that each of the two occupants is liable for all gas and electricity consumed in the cottage during their occupation.

In April 2017, Abigail decides to sell the freehold estate in Oxford House to Edgar. The sale is completed late April 2017, and Edgar registered as proprietor. Edgar failed to inspect the property before purchase, and is now shocked to discover Betty, Connor and Darren in occupation. He wishes to obtain vacant possession of the house and cottage, and writes to Betty, Conor and Darren telling them to leave immediately.

At no point during Connor and Darren’s eight-month occupation prior to sale does Abigail seek to exercise her right under Clause 3 to introduce a new occupant into the cottage.

Advise Betty, Connor and Darren.

Filippo is registered proprietor of the freehold estate in No 1 and No 2 of a row of terraced houses. He decides to live in No 1 and sell No 2 to Griselda. As Filippo is concerned to protect the value of No 1, shortly after the sale completes he agrees with Griselda that No 2 will be occupied exclusively as a family home. The undertaking is formalised in a written document, signed by both Filippo and Griselda, and the covenant expressed to be ‘for the benefit of Filippo, his successors and assigns’.

Six months after Griselda moves into No 2, she undertakes to “Filippo, my neighbour” that the external appearance of No 2 will be preserved unchanged. The undertaking is contained in a written document signed by Griselda but not Filippo, and subsequently registered against No 2’s freehold estate.

A year later, Filippo sells the freehold estate in No 1 to Harrison. After completing the purchase, Harrison goes overseas for an extended holiday, during which time the freehold estate in No 2 is sold to a builder, Ian, who is registered as proprietor shortly thereafter. When Harrison returns, he is alarmed to see that the front wall of No 2 has been demolished by Ian to enable him to park vans in the front garden. Ian also informs Harrison of his plan to move out of No 2 for a couple of years to allow his student daughter and her university friends to live in the property. Harrison cautions Ian about covenants restricting the use that can be made of No 2, but as Ian was (correctly) told by Griselda prior to sale of No 2 that no notice of the “family home” covenant was ever entered on the Land Register, he simply replies that he will act in accordance with his legal rights and obligations.

Advise Harrison.

Julia is the registered proprietor of a plot of land that includes a house with single garage and an adjacent cottage. In January 2014, Julia allows her close friend, Kingsley, to live rent-free in the cottage. Given their long-standing friendship, Julia also tells Kingsley that he can use the garage to park his car.

Water reaches the cottage via a pipe running underground from the house. The water is metered on entry to the house, and the monthly bill paid by Julia. Julia agrees not to interfere with the flow of water to the cottage; Kingsley is grateful that he does not have to arrange a separate water supply. Julia has a collection of wine which she keeps in a corner of the cottage’s cellar.

In June 2015, Julia decides to sell the cottage to Kingsley. The freehold estate is transferred by deed, and Kingsley registered as new proprietor. In October 2015, Julia formally gives Kingsley the right to park in the garage in return for a payment of £200. The right is conferred by a deed signed by both Julia and Kingsley, but is not registered against the freehold estate in the house.

In October 2016, Julia sells the house and garage to Leo; he is registered as freehold proprietor shortly thereafter. Leo also buys Julia’s wine collection which remains in the cellar of the cottage. In February 2017, Kingsley sells the freehold estate in the cottage to Mark.

The following disputes have now arisen:

• Mark wishes to park his car in the garage; Leo objects to this
• Leo has interrupted the flow of water to the cottage; Mark objects to this
• Mark is demanding that Leo remove his wine from the cottage’s cellar

Advise Mark.

Nick,who lives and works in Germany, inherits the freeholde state in RoseCottage in 2004 and is registered as proprietor. Nick is too busy to return to England to manage the cottage and asks his friend, Oliver, to look after it. Oliver agrees, although he lives more than 100 miles away and so is not able to visit on a regular basis. In fact, after an initial visit in 2004 Oliver never returns to the property.

In January 2005 Petra, who has noticed that the cottage appears to be unoccupied, breaks in and takes up residence. The property has fallen into disrepair and over the next four years she spends a considerable sum of money refurbishing and redecorating it, including installing central heating and a new kitchen and bathroom.

Nick retires from his job and returns to England in February 2017, intending to spend his retirement in Rose Cottage. When he arrives at the property he discovers Petra living there. Petra refuses to leave, asserting that she has secured title to the property by adverse possession and saying that after all that she has spent on the property it would be a breach of her human rights to make her move out. Nick says that anyone who breaks into another’s property commits a criminal offence and has no right to be registered with title.

The rear garden of Rose Cottage is L shaped, with the bottom section (“the Strip”) running behind the garden of Apple Cottage, the next-door property owned by Quentin, and up to a road. When Petra moves into Rose Cottage she notices that the Strip receives a lot of sunlight and in 2006, after discussing her plans with Quentin, she builds a substantial summer house there. Over the years Petra holds many parties in the summer house to which she invites her neighbours, including Quentin. She also allows Quentin to use the summer house to host occasional drinks parties.

Quentin re-mortgages Apple Cottage in 2016 and discovers that the Strip actually forms part of his registered title and does not belong to Rose Cottage after all. Quentin asks Petra to vacate the Strip.

On the other side of Rose Cottage is a field owned by Raj, title to which is unregistered. Since moving in to Rose Cottage in January 2005, Petra has walked her dogs in the field and picked the wild flowers. To make it easier to get around she regularly cuts a path through the tall grass. She has also replaced and maintained the gate to the field. It is now May 2017 and Raj, who wishes to put cows in the field, has asked Petra to stop using it. Petra wishes to claim title to the field by adverse possession.

Advise Petra of her options in relation to Rose Cottage, the Strip and the field. Petra has asked that your advice include consideration of the effect of the European Convention on Human Rights.

Eleanor owns two properties, Green Gables and Red Gables, both of registered title. The properties are adjoining semidetached houses, each with a long back garden. The Red Gables garden contains a pond suitable for swimming and a paddock at the rear; the garden is accessed through the house and the paddock accessed by a ten feet wide driveway which runs down the side of Red Gables and onto the paddock. The Green Gables garden is accessed by a four feet wide path which runs down the side of Green Gables.

In 2014 Eleanor leases Green Gables to Freddie for five years while living in Red Gables herself. Shortly after Freddie moves in, Eleanor agrees that he can swim in the pond in her garden. Eleanor dislikes horses so makes no use of the paddock, but on occasion she walks down the driveway onto the paddock to admire the wild flowers that grow there.

In March 2016 Eleanor sells both the freehold of Green Gables and the Red Gables paddock to Freddie. The transfers are made by deed and Freddie registered as new proprietor. At the time of transfer, Freddie tells Eleanor that he wishes to keep a horse in the paddock; Eleanor replies that she does not mind what he does. In April 2016 Eleanor sells the freehold in the remainder of Red Gables (including the driveway) to Gary; the transfer is made by deed and Gary registered as proprietor.

Once Freddie becomes owner of the paddock, he buys a horse. He manages to get the horse into the paddock via the path to the side of Green Gables and a gate that he has made connecting the Green Gables back garden with the paddock, but now finds great difficulty getting the horse and its supplies in and out that way. He therefore wishes to be able to drive a Land Rover and trailer down the driveway to the side of Red Gables and onto the paddock.

Gary is refusing Freddie use of the driveway and has told him that he can no longer swim in the pond.

Advise Freddie

Jack and Kendra are the registered owners of ‘The Hollies’ which they live in with their four children aged from 3 to 19. In 2014, Jack’s business venture fails, leaving £150,000 owed to his creditors. Lionel is appointed as trustee in bankruptcy in January 2015. Jack has no assets apart from his share in the family home. Jack and Kendra own the property as tenants in common in equity, with Jack having a one-third share and Kendra having a two-thirds share. There is no mortgage on the property.

In May 2016, Lionel applies under the Trusts of Land and Appointment of Trustees Act 1996 and the Insolvency Act 1986 for an order of sale in relation to The Hollies. The property is worth £300,000. Lionel is also claiming that a deduction should be made from Kendra’s two-thirds share for an occupation rent to reflect the fact that since Jack’s bankruptcy Jack and Kendra have continued to live in The Hollies.

Jack and Kendra do not want to move. They have lived in The Hollies for 25 years and it has been specially adapted for the needs of their 19-year-old daughter, Mary, who is severely disabled. The local authority has offered alternative housing for rent but it is several miles away from The Hollies and in a very undesirable area. Their two children of school age (aged 7 and 15) would have to move from their present schools to schools with a much worse reputation. Kendra has a secure job and her mother, who lives nearby, walks over to help with child care while Kendra is at work; her mother has said that as she cannot drive she will not be able to carry on doing this if Kendra moves. Furthermore, significant building work is required to make the alternative housing suitable for Mary.

Advise Jack and Kendra.

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Key terms and definitions

Obtaining landlord permission, tenants and subtenants responsibilities and liabilities, protecting the tenant from sublease pitfalls, putting the agreement in writing, alternatives to subleasing, final takeaways, templates and examples to download in word and pdf formats, tenants and subtenants obligations under a sublease agreement.

From finding a new job in another state to returning home to care for a sick family member to taking the big step of moving in with a new partner, many people find themselves in a situation where they need to cancel their existing lease so they can move somewhere else. Unfortunately, many landlords are reluctant to cancel existing leases, since that puts them in the position of potentially losing money while they look for a new tenant to fill the space. However, there is a solution that is workable for tenants while also being amenable to many landlords: a Sublease Agreement , also known as a sublet. There are many misconceptions about how subleases work and the responsibilities of people involved. This guide will walk through the most important terms to know and the main issues to be aware of when creating a sublease arrangement:

1. Differences between a sublease and an assignment

2. How to get permission from a landlord to sublet

3. Responsibilities and liabilities of the tenant and subtenant

4. Protective measures for the tenant

5. Sublease alternatives

There are many terms used in subleasing that are often used interchangeably and in confusing ways. However, the key distinction is between subleases and assignments . Both of these can be easily created, but have different legal implications and responsibilities for the involved parties that will be explored further in this guide.

What is a "sublease"?

A Sublease Agreement involves a transfer of less than all of the lease . For example, if a person living alone in a leased two bedroom apartment decides to rent out the spare bedroom to a new roommate, that would be a sublease. Or, if a person rents their whole apartment to someone for a couple of months while they travel for the Summer, but then return to the apartment in the Fall, that would also be considered a sublease. The main parties involved in a sublease are:

1. the original tenant , also known as the sublessor , who is the person who first rented the property and plans to rent the space to a new renter, and

2. the subtenant , also known as the sublessee , who is the person who rents their property from the sublessor.

What is an "assignment"?

An Assignment Agreement involves the entire remainder of the lease being transferred to a new tenant. For example, if someone was required to move to a new state for their job and a new tenant takes over the remaining six months on their lease, that would be called an assignment. The main parties involved in an assignment are:

1. the assignor , who is the person who originally rented the property, and

2. the assignee , who is the person renting the property from the assignor and taking over the remainder of their lease.

The first, and most important step, in arranging a sublease or assignment agreement is getting permission from the landlord. The landlord must consent to the arrangement and put this consent in writing using a Consent to Sublease form. If a tenant does not get the consent of the landlord, they leave both themselves and their subtenant or assignee in danger. The landlord would have the option of evicting the tenant, in the case of a sublease, or evicting the assignee, in the case of an assignment, for violation of the original lease agreement. Further, the landlord would feel less obligated to correct defects with the property, such as fixing leaky faucets or broken appliances, given that they do not have a valid agreement with the subtenant or assignee to provide these services.

Unless it says otherwise, when the lease prohibits tenants from subletting or assigning without their landlord's consent, ordinarily the landlord can arbitrarily refuse to permit a sublease or assignment according to their own discretion . However, some states and many leases now provide that the landlord must not unreasonably refuse to give consent to a sublease or assignment. In these instances, if the tenant is able to find a new person who will be at least as good a tenant -- able to pay rent on time, not play the stereo too loud, and follow the other agreements in the lease -- the landlord must accept that person as a subtenant.

If a person's lease prohibits them from assigning the lease without permission from the landlord but does not mention anything about subletting, would that person still be able to sublet the apartment to their friend? Yes, if the lease states only that an assignment is forbidden, the person would still be able to sublet their apartment. Conversely, if the lease prohibits only subletting, the tenant would be able to assign the lease without their landlord's approval. Both actions are prohibited only if the lease says that the tenant cannot sublease the property OR assign the lease without the landlord's consent. Note, however, that some cities, such as New York, have ordinances regulating subleases that take precedence over private agreements.

When subleasing an apartment, the original tenant should try their best to find a person who they think is trustworthy and will continue to pay the rent. The main reason for doing this is that the original tenant remains responsible for making sure the rent gets paid . The subtenant usually does not have to answer to the landlord, only the original tenant; the landlord can generally only sue the original tenant for the rent . If the subtenant does not pay the rent on time, the landlord can start eviction proceedings against the original tenant. If the subtenant owes several months of back rent, the original tenant is responsible for making sure it is paid. In the same way, the original tenant is responsible for making sure the rental is in good shape even if they are not currently living there.

What can a tenant do if they end up paying for the outstanding rent or damage a subtenant did to the property? The tenant can then go to the subtenant to ask that they be reimbursed for this money and take them to small claims court if they refuse to pay.

Unlike in a sublease, in an assignment, if the assignee fails to pay the rent, the landlord can go directly after the assignee for the unpaid rent . The landlord can also sue the assignee for any damage to the apartment that they are responsible for. Be aware, however, that the landlord can still sue the assignor, or original tenant, as well, even if the landlord consented to the assignment. The landlord has their choice of who to go to when they are looking to get paid.

Before subleasing a property or assigning a lease, the original tenant should make sure their subtenant or assignee is a responsible person who will pay the rent on time and will not damage the apartment. In a sublease or assignment, the original tenant essentially steps into the role of landlord to their subtenant or assignee. Therefore, it's important for them to protect themselves the same way a landlord would. When entering into sublease or assignment agreements, the original tenant often puts protective measures in place , including requiring payment of a security deposit, often equal to at least one month's rent, and putting the terms and agreements of the sublease in writing, including details like the length of the sublease or assignment, the amount of rent, when and to whom it must be paid, late charges, payment for damages, and so on.

Since the original tenant is acting as a landlord when subleasing, they are bound by some of the same laws that apply to the landlord . For example, each state has different rules and guidelines about the maximum amount that may be charged for a security deposit. In most cases, the original tenant may not reenter the property without giving appropriate notice to the subtenant. However, particular to assignments, those agreements often include a provision that the original tenant has the right to reenter the property and retake possession of it if the assignee fails to pay the rent. This gives the assignor some additional protection if the assignee defaults on the lease.

Once all parties, including the original tenant, subtenant, and landlord agree to the sublease or assignment, it should be put in writing. A written agreement works to protect all of the parties and their rights and obligations under the lease agreement . An oral agreement is enforceable in some states, but in all cases is subject to potential misunderstandings and challenges in court. A written Lease Assignment Agreement is usually relatively brief since it incorporates all of the provisions included in the original Residential Lease Agreement or Commercial Lease Agreement . A Sublease Agreement is more extensive and includes specifics related to when and to whom rent payments will be made, whether the subtenant will pay a security deposit to the original tenant and if so the method and amount of that payment, who will receive notices related to the rental. Once a Sublease Agreement or Lease Assignment Agreement has been put into writing, it should be signed by all involved parties. The Agreement must always be signed by the tenant and subtenant or assignee. However, the document may also be signed by the landlord to serve as a written record that the landlord grants their permission and is aware of the arrangement.

What if a tenant must move out of their rental property for some reason, say, six months before the lease expires, but they don't want to worry about the potential hassle and risk of finding a subtenant or assignee? The lease may give the tenant the right to cancel their lease by giving a certain amount of notice, usually two to three months. In a month-to-month lease, the tenant usually must give only thirty days notice. If the lease does not allow for this, the tenant has the option of finding a new tenant, subject to their landlord's approval, and the tenant's own trouble and expense. When the tenant finds a suitable person, they can ask their landlord to sign a document releasing them from their original lease . The landlord will then have the new tenant pay a deposit and sign a new lease. If the landlord agrees to do this, the original tenant will no longer be liable for the rent or acts of the new tenant. This solution is often acceptable to reasonable landlords.

Subleasing can be a great option for someone looking to move somewhere else, either temporarily or permanently, while they are in the middle of their current lease term. Here are the most important things to remember when setting up a sublease or assignment agreement:

• A sublease is a transfer of less than all of the lease; an assignment is a transfer of the entire remainder of the lease.
• The landlord must grant their permission for the sublease or assignment in writing if the tenant wants to protect themselves from future liability.
• In a sublease, the landlord can only go after the original tenant for rent or damages owed by the subtenant; in an assignment, the landlord can go after either the original tenant or the assignee.
• The original tenant can use measures such as collecting a security deposit to protect themselves in case the subtenant or asignee fails to pay the rent or causes damages.
• The best way to protect all involved parties is to put the agreement in writing.

About the Author: Malissa Durham is a Legal Templates Programmer and Attorney at Wonder .Legal and is based in the U.S.A.

• Sublease Agreement
• Lease Assignment Agreement
• Consent to Sublease

43 CFR § 2521.3 - Assignment.

(a) Lands which may be assigned. While by the Act of March 3, 1891 ( 26 Stat. 1096 ; 43 U.S.C. 329 ), assignments of desert-land entries were recognized, the Department of the Interior , largely for administrative reasons, held that a desert-land entry might be assigned as a whole or in its entirety, but refused to recognize the assignment of only a portion of an entry. The Act of March 28, 1908, however, provides for an assignment of such entries, in whole or in part, but this does not mean that less than a legal subdivision may be assigned. Therefore no assignment, otherwise than by legal subdivisions, will be recognized. The legal subdivisions assigned must be contiguous.

(b) Qualifications of assignees.

(1) The Act of March 28, 1908, also provides that no person may take a desert-land entry by assignment unless he is qualified to enter the tract so assigned to him. Therefore, if a person is not at least 21 years of age and, excepting Nevada, a resident citizen of the State wherein the land involved is located; or if he is not a ciitzen of the United States, or a person who has declared his intention to become a citizen thereof; or, if he has made a desert-land entry in his own right and is not entitled under § 2521.1 to make a second or an additional entry, he cannot take such an entry by assignment. The language of the act indicates that the taking of an entry by assignment is equivalent to the making of an entry, and this being so, no person is allowed to take more than one entry by assignment, unless it be done as the exercise of a right of second or additional entry.

(2) A person who has the right to make a second or additional desert-land entry may exercise that right by taking an assignment of a desert-land entry, or part of such entry, if he is otherwise qualified to make a desert-land entry for the particular tract assigned.

(3) The Act of March 28, 1908, also provides that no assignment to or for the benefit of any corporation shall be authorized or recognized.

(c) Showing required of assignees; recognition of assignments.

(1) As evidence of the assignment there should be transmitted to the authorizing officer the original deed of assignment or a certified copy thereof. Where the deed of assignment is recorded a certified copy may be made by the officer who has custody of the record. Where the original deed is presented to an officer qualified to take proof in desert-land cases, a copy certified by such officer will be accepted.

(2) An assignee must file with his deed of assignment, a statement on a form approved by the Director , showing his qualifications to take the entry assigned to him. He must show what applications or entries, if any, have been made by him or what entries assigned to him under the agricultural public land laws, and he must also show his qualifications as a citizen of the United States; that he is 21 years of age or over; and also that he is a resident citizen of the State in which the land assigned to him is situated, except in the State of Nevada, where citizenship of the United States only is required. If the assignee is not a native-born citizen of the United States, he should also furnish a statement as to his citizenship status in accordance with subpart 1811 of this chapter. If the assignee is a woman, she should in all cases state whether she is married, and if so, she must make the showing required by subpart 1811 of this chapter. Desert-land entries are initiated by the payment of 25 cents per acre, and no assignable right is acquired by the application prior to such payment. (6 L.D. 541, 33 L.D. 152.) An assignment made on the day of such payment, or soon thereafter, is treated as suggesting fraud, and such cases will be carefully scrutinized. The provisions of law authorizing the assignment of desert entries, in whole or in part, furnish no authority to a claimant under said law to make an executory contract to convey the land after the issuance of patent and thereafter to proceed with the submission of final proof in furtherance of such contract. (34 L.D. 383.) The sale of land embraced in an entry at any time before final payment is made must be regarded as an assignment of the entry, and in such cases the person buying the land must show that he possesses all the qualifications required of an assignee. (29 L.D. 453.) The assignor of a desert-land entry may execute the assignment before any officer authorized to take acknowledgements of deeds. The assignee must furnish a statement on a form approved by the Director as to his qualifications.

(3) No assignments of desert-land entries or parts of entries are conclusive until examined in the proper office and found satisfactory and the assignment recognized. When recognized, however, the assignee takes the place of the assignor as effectively as though he had made the entry, and is subject to any requirement that may be made relative thereto. The assignment of a desert-land entry to one disqualified to acquire title under the desert-land law, and to whom, therefore, recognition of the assignment is refused by the authorizing officer , does not of itself render the entry fraudulent, but leaves the right thereto in the assignor. In such connection, however, see 42 L.D. 90 and 48 L.D. 519.

(4) All applications for recognition of assignment of desert-land entries must be accompanied by an application service fee of $10 which will not be returnable.

• High Courts
• Bombay High Court
• O.21 R. 16 CPC | Transferee Of...

O.21 R. 16 CPC | Transferee Of Property Can Apply For Execution Of Decree Without Separate Assignment Order: Bombay High Court

Sanjana dadmi.

16 July 2024 7:06 AM GMT

The Bombay High Court has ruled that the Appellate Bench of the Small Causes Court made a grave error in holding that a transferee of rights in the property needs a separate assignment of the decree for its execution, as it overlooked the Explanation added through the 1977 amendment to Order 21 Rule 16 of the Civil Procedure Code, 1908 (CPC), which clarified that a transfer of property allows the transferee to execute the decree without a separate assignment.

A single judge bench of Sandeep V. Marne was considering the petitioner's challenge to the order of the Appellate Bench that allowed the Revision Application filed by respondent no. 1 against the order of the Small Causes Court, Mumbai dated 19 April 2024.

Before the Small Causes Court, the petitioner had filed application for execution of the decree, for eviction against respondent no. 1. The Small Causes Court issued a warrant of possession in favour of the petitioner while rejecting all the objections raised by respondent no.1 on 19 April 2024.

The Appellate Bench had directed the Small Causes Court to first decide on the objection raised by respondent no. 1 regarding the maintainability of the execution proceedings and had stayed the possession warrant. It held that the mere transfer of property did not amount to assignment of decree under Order 21 Rule 16 CPC and thus set aside order of 19 April 2024.

Amendment of Order 21 Rule 16 CPC

The High Court noted that the Appellate Bench failed to consider the amendment in Order 21 Rule 16 of CPC.

Explanation O21 R16 added in 1977 provided that “Nothing in this rule shall affect the provisions of section 146, and a transferee of rights in the property, which is the subject matter of the suit, may apply for execution of the decree without a separate assignment of the decree as required by this rule.” Thus, the Explanation indicates that a person who has succeeded to a decree holders' right is entitled to execution decree under Section 146 CPC, without a separate assignment of the decree.

The Court referred to the Vaishno Devi Construction vs. Union of India (LL 2021 SC 580) , where the Supreme Court held that the Explanation added to O21 R16 makes it clear that the earlier position of law, which required a separate assignment of the decree, would not prevail post the amendment.

The High Court observed that even though the Appellate Bench reproduced the said provision, it failed to take note of the amendment and relied on cases which are no longer good law. It held that the Appellate Bench committed a grave error in relying on the case of Jugalkishore Saraf vs. Raw Cotton Co. Ltd (AIR 1955 SC 376), a case pronounced before Vaishno Devi and before the Explanation was added to O21 R16.

“Surprisingly, though the Appellate Bench has reproduced Rule 16 of Order 21 in its judgment, it failed to notice that after delivery of judgment in Jugalprasad Saraf, Explanation has been inserted in Rule 16 obviating the need for separate assignment of decree and enabling transferee of the property to apply for execution of decree.”

The Court held that the Appellate Bench set aside the order of the Executing Court based on erroneous reasoning. It thus quashed the order of the Appellate Bench and stated that the petitioner could seek execution without an assignment of the decree.

New objection raised by Respondent no. 1

Before the Small Causes Court/Executing Court, all the objections raised by respondent no. 1 regarding the maintainability of the execution proceedings were dismissed. The Small Causes Court had noted that objections could not be considered under Section 47 CPC and thus issued a possession warrant under O21 R35 CPC on 19 April 2024.

Respondent no. 1 then raised a new ground regarding lack of jurisdiction of Small Causes Court to pass the execution decree in view of the provisions of Section 22 of the Maharashtra Rent Control Act and also prayed for stay of possession warrant. The Small Causes Court issued notice with respect to this new objection petition, but rejected the application for stay of possession warrant.

However, the Appellate Bench stayed the possession warrant on the ground that a new objection was raised before the Small Causes Court.

The High Court was of the view that the order of the Small Causes Court dated 19 April 2024 had attained finality. It remarked “Merely because the First Respondent has filed one more Objection Petition, maintainability of which is yet to be decided, the same was not a ground for the Executing Court to stay the warrant of possession. In my view, the process of raising and decision of objections by the Executing Court is already over.”

It thus held that the stay on the warrant of possession by the Appellate Bench due to the filing of a new objection petition was incorrect.

With respect to the contention of the petitioner that respondent no. 1 could not raise a new objection before the Small Causes Court when previous objections were already rejected, the High Court noted that “It appears that the objection of jurisdiction sought to be raised by the First Respondent before the Executing Court with respect to Section 22 of the Maharashtra Rent Control Act requires conduct of factual enquiry about his nature of tenancy.”

It observed that the as the objection petition was still pending, it could not exercise its powers to decide the question of objection until it is first decided by the Small Causes Court.

Case title: Mr. Momin Zulfikar Kasam vs. Ajay Balkrishna Durve & Anr. (Writ Petition No. 9256 OF 2024)

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