Public Act 093-0428
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Public Act 93-0428 HB2550 Enrolled LRB093 09802 LCB 10047 b AN ACT concerning mortgages. Be it enacted by the People of the State of Illinois, represented in the General Assembly: Section 5. The Mortgage Act is amended by changing Section 2 as follows: (765 ILCS 905/2) (from Ch. 95, par. 52) Sec. 2. Every mortgagee of real property, his assignee of record, or other legal representative, having received full satisfaction and payment of all such sum or sums of money as are really due to him from the mortgagor, and every trustee, or his successor in trust, in a deed of trust in the nature of a mortgage, the notes, bonds or other indebtedness secured thereby having been fully paid before September 7, 1973, shall, at the request of the mortgagor, or grantor in a deed of trust in the nature of a mortgage, his heirs, legal representatives or assigns, in case such mortgage or trust deed has been recorded or registered, make, execute and deliver to the mortgagor or grantor in a deed of trust in the nature of a mortgage, his heirs, legal representatives or assigns, an instrument in writing executed in conformity with the provisions of this section releasing such mortgage or deed of trust in the nature of a mortgage, which release shall be entitled to be recorded or registered and the recorder or registrar upon receipt of such a release and the payment of the recording fee therefor shall record or register the same. Mortgages of real property and deeds of trust in the nature of a mortgage shall be released of record only in the manner provided herein or as provided in the Mortgage Certificate of Release Act; however, nothing contained in this Act shall in any manner affect the validity of any release of a mortgage or deed of trust made prior to January 1, 1952 on the margin of the record. Except in the case of a mortgage that is required to bereleased under the Mortgage Certificate of Release Act, every mortgagee of real property, his assignee of record, or other legal representative, having received full satisfaction and payment of all such sum or sums of money as are really due to him from the mortgagor, and every trustee, or his successor in trust, in a deed of trust in the nature of a mortgage, the notes, bonds or other indebtedness secured thereby having been fully paid after September 7, 1973, shall make, execute and deliver to the mortgagor or grantor in a deed of trust in the nature of a mortgage, his heirs, legal representatives or assigns, an instrument in writing releasing such mortgage or deed of trust in the nature of a mortgage or shall deliver that release to the recorder or registrar for recording or registering. If the release is delivered to the mortgagor or grantor, it must have imprinted on its face in bold letters at least 1/4 inch in height the following: "FOR THE PROTECTION OF THE OWNER, THIS RELEASE SHALL BE FILED WITH THE RECORDER OR THE REGISTRAR OF TITLES IN WHOSE OFFICE THE MORTGAGE OR DEED OF TRUST WAS FILED". The recorder, or registrar, upon receipt of such a release and the payment of the recording or registration fee, shall record or register the release. A certificate of release issued and recorded bya title insurance company or its duly appointed agentpursuant to the Mortgage Certificate of Release Act shallsatisfy the requirements of this Section 2. (Source: P.A. 92-765, eff. 8-6-02.) Section 10. The Mortgage Certificate of Release Act is amended by changing Sections 5, 10, 15, 20, 35, 40, and 50 and by adding Sections 10.1 and 70 as follows: (765 ILCS 935/5) (Section scheduled to be repealed on January 1, 2004) Sec. 5. Definitions. As used in this Act: "Hold-harmless agreement" means a letter whereby a titleinsurance company, as defined in the Title Insurance Act,agrees to indemnify another title insurance company preparingto insure a present transaction that the indemnifying titleinsurance company has previously insured over without takingan exception to its title insurance policy for mattersremaining of record, such as a previously paid but unreleasedmortgage. A model form of a hold-harmless agreement is setforth in Section 70 of this Act. "Mortgage" means a mortgage or mortgage lien on an interest in one-to-four family residential real property in this State given to secure a loan in the original principal amount of less than $500,000. Trust deeds are not included. "Mortgagee" means either: (i) the grantee of a mortgage; or (ii) if a mortgage has been assigned of record, the last person to whom the mortgage has been assigned of record. "Mortgage servicer" means the last person to whom a mortgagor or the mortgagor's successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage. A person transmitting a payoff statement is the mortgage servicer for the mortgage described in the payoff statement. "Mortgagor" means the grantor of a mortgage. "Payoff statement" means a statement for the amount of the (i) unpaid balance of a loan secured by a mortgage, including principal, interest, and any other charges due under or secured by the mortgage; and (ii) interest on a per day basis for the unpaid balance. "Record" means to deliver the certificate of release for recording with the county recorder. "Title insurance agent" has the same meaning ascribed to it as in Section 3 of the Title Insurance Act. "Title insurance company" has the same meaning ascribed to it as in Section 3 of the Title Insurance Act. (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/10) (Section scheduled to be repealed on January 1, 2004) Sec. 10. Mortgage presently being paid off. Receipt ofpayment pursuant to the lender's written payoff statementshall constitute authority to record a certificate ofrelease. A certificate of release shall be delivered for recording to the recorder of each county in which the mortgage is recorded, together with the otherdocuments from the new transaction, including a deed or newmortgage, or both by the title insurance company or its dulyappointed agent. (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/10.1 new) Sec. 10.1. Previously paid mortgages. A title insurancecompany or its duly appointed title insurance agent may issuea mortgage certificate of release pursuant to this Act for amortgage that appears in the chain of title prior to themortgage presently being paid. The title insurance companymust have proof of payment from its own prior files that itpaid the mortgage or mortgages pursuant to a payoffstatement. Where another title insurance company has paid offan unreleased mortgage pursuant to a payoff statement, thetitle insurance company or its duly appointed title insuranceagent in the current transaction may rely upon thehold-harmless letter of that prior title insurance company toissue a mortgage certificate of release. This grant ofauthority is subject to the condition that the issuer of themortgage certificate of release does not have notice that thelender opposes its release. A single mortgage certificate ofrelease may include more than one mortgage, including bothpresently and previously paid mortgages. (765 ILCS 935/15) (Section scheduled to be repealed on January 1, 2004) Sec. 15. Certificate of release. An officer or duly appointed agent of a title insurance company may, on behalf of a mortgagor or a person who has acquired from a mortgagor title to all or part of the property described in the mortgage, execute a certificate of release that complies with the requirements of this Act and record the certificate of release with the recorder of each county in which the mortgage is recorded, provided that payment of the loan secured by the mortgage was made in accordance with a written payoff statement furnished by the mortgagee or the mortgage servicer. The title insurance company or its duly appointedagent shall not be required to search the public record for apossible recorded satisfaction or release. (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/20) (Section scheduled to be repealed on January 1, 2004) Sec. 20. Contents of certificate of release. A certificate of release executed under this Act must contain substantially all of the following for each mortgage beingreleased: (a) The name of the mortgagor, the name of the original mortgagee, and, if applicable, the mortgage servicer at the date of the mortgage, the date of recording, and the volume and page or document number or other official recording designation in the real property records where the mortgage is recorded. (b) A statement that the mortgage was paid in accordance with the written payoff statement and there is no objection from the mortgagee or mortgage servicer or its successor in interest. With respect to previously paid mortgages, the hold-harmlessletter from a title insurance company, as provided in Section10.1 of this Act, shall satisfy this requirement. (c) A statement that the person executing the certificate of release is an officer or a duly appointed agent of a title insurance company authorized and licensed to transact the business of insuring titles to interests in real property in this State pursuant to subsections (2) and (3) of Section 3 of the Title Insurance Act. (d) A statement that the certificate of release is made on behalf of the mortgagor or a person who acquired title from the mortgagor to all or a part of the property described in the mortgage. (e) A statement that the mortgagee or mortgage servicer provided a written payoff statement. The hold-harmlessletter from a title insurance company, as provided in Section10.1 of this Act, shall satisfy this requirement with respectto previously paid mortgages. (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/35) (Section scheduled to be repealed on January 1, 2004) Sec. 35. Effect of recording certificate of release. For purposes of releasing the lien of the mortgage, a certificate of release containing the information and statements provided for in Section 20 and executed as provided in Section 25 is prima facie evidence of the facts contained therein, and upon being recorded with the recorder, shall constitute a release of the lien of the mortgage described in the certificate of release. The title insurance company or title insurance agent recording the certificate of release may use the recording fee it may have collected for the recording of a release or satisfaction of the mortgage to effect the recording of the certificate of release. (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/40) (Section scheduled to be repealed on January 1, 2004) Sec. 40. Wrongful or erroneous certificate of release. Recording of a wrongful or erroneous certificate of release by a title insurance company or its title insurance agent shall not relieve the mortgagor or the mortgagor's successors or assignees from any personal liability on the loan or other obligations secured by the mortgage. In addition to any other remedy provided by law, a title insurance company executing or recording a certificate of release under this Act is liable to the mortgagee for actual damages sustained due to the recording of the certificate of release. The prevailing party in any action or proceeding seeking actual damages due to the recording of a certificate of release shall be entitled to the recovery of reasonable attorneys fees and costs incurred in that action or proceeding. (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/50) (Section scheduled to be repealed on January 1, 2004) Sec. 50. Form of certificate of release. A certificate of release, in substantially the following form, allowing foralterations to permit the inclusion of multiple mortgages,both presently and previously paid, complies with this Act. CERTIFICATE OF RELEASE Date:....Title Order No.:..... 1. Name of mortgagor(s):..... 2. Name of original mortgagee:..... 3. Name of mortgage servicer (if any):..... 4. Mortgage recording: Vol.:.....Page:.....or Document No.:..... 5. The above referenced mortgage has been paid in accordance with the payoff statement and there is no objection from the mortgagee or mortgage servicer or its successor in interest to the recording of this certificate of release. 6. The person executing this certificate of release is an officer or duly appointed agent of a title insurance company authorized and licensed to transact the business of insuring titles to interests in real property in this State pursuant to Section 30 of this Act. 7. This certificate of release is made on behalf of the mortgagor or a person who acquired title from the mortgagor to all or part of the property described in the mortgage. 8. The mortgagee or mortgage servicer provided a payoff statement. 9. The property described in the mortgage is as follows: Permanent Index Number:..... Common Address:..... (Name of title insurance company) By:..... (Name of officer and title or name of agent and name of officer / representative thereof) Address:..... Telephone No.:..... State of Illinois) ) County of ) This instrument was acknowledged before me on .....(date) by .....(name of person) as .....(officer for / agent of) .....(title insurance company). ..... Notary Public My commission expires on..... (Source: P.A. 92-765, eff. 8-6-02.) (765 ILCS 935/70 new) Sec. 70. Form of hold-harmless agreement. Ahold-harmless agreement in substantially the following form,allowing for alterations to reflect the facts of thetransaction and identity of the title insurance companies,complies with this Act.Hold-harmless AgreementTO: .................... (Presently insuring title insurancecompany)Re: Policy No.: ...... (Previously insuring title insurancecompany)Policy amount: $..............Policy/Commitment No.: ............... (Presentlyinsuring title insurance company)You show as exception number(s) .................. in yourabove referenced commitment for title insurance dated.........., the following exception(s):Mortgage dated ........., recorded as Document No. .......made by ................................. (borrow) to................................. (lender) to secure anindebtedness in the amount of $.........For and in consideration of your deleting said exception(s),we agree to indemnify you against loss that you may sustainas a result of said deletion. In no event may said indemnityexceed the face amount of our policy as noted above.In the event any claim is made against you as a result ofyour deletion, you agree to notify us within 30 days of thedate the claim is made.Any action you take with respect to the claim will notobligate us under this letter unless the aforesaid notice hasbeen furnished us and we have adequate time to consider ourapproval or disapproval of the action...........................................Title Insurance Company (Previously insuring) (765 ILCS 935/65 rep.) (765 ILCS 935/90 rep.) Section 20. The Mortgage Certificate of Release Act is amended by repealing Sections 65 and 90. Section 99. Effective date. This Act takes effect December 31, 2003.
"Assignee" redirects here. For the racehorse, see Assignee (horse).
An assignment (Latin cessio) is a term used with similar meanings in the law of contracts and in the law of real estate. In both instances, it encompasses the transfer of rights held by one party, the assignor, to another party, the assignee. It can also be a transfer of a benefit, including an equitable interest, according to established rules (at common law or in equity). The rights may be vested or contingent. The details of the assignment determines some additional rights and liabilities (or duties).
Typically a third party is involved in a contract with the assignor, and the contract is, in effect, transferred to the assignee. For example, a borrower borrows money from a local bank. The local bank receives a mortgage note and can thereafter transfer that note to a financial institution in exchange for a lump-sum of cash, thereby assigning the right to receive payment from the borrower to another entity. Mortgages and lending contracts are relatively amenable to assignment since the lendor's duties are relatively limited; other contracts which involve personal duties such as legal counsel may not be assignable.
The related concept of novation is not assignment. Rather than assigning only the rights to another party, novation involves the replacement of the original party with a new party or the replacement of the original contract with a new contract. Since novation creates a new contract, it requires the consent of all parties, but assignment does not require the consent of the nonassigning party, but in the case of assignment, the consent of the nonassigning party may be required by a contractual provision.
The assignment does not necessarily have to be in writing; however, the assignment agreement must show an intent to transfer rights. The effect of a valid assignment is to extinguish privity (in other words, contractual relationship, including right to sue) between the assignor and the third-party obligor and create privity between the obligor and the assignee.
Liabilities and duties
Unless the contractual agreement states otherwise, the assignee typically does not receive more rights than the assignor, and the assignor may remain liable to the original counterparty for the performance of the contract. The assignor often delegates duties in addition to rights to the assignee, but the assignor may remain ultimately responsible.
However, in the United States, there are various laws that limit the liability of the assignee, often to facilitate credit, as assignees are typically lenders. Notable examples include a provision in the Truth in Lending Act and provisions in the Consumer Leasing Act and the Home Ownership Equity Protection Act.
In other cases, the contract may be a negotiable instrument in which the person receiving the instrument may become a holder in due course, which is similar to an assignee except that issues, such as lack of performance, by the assignor may not be a valid defense for the obligor. As a response, the United States Federal Trade Commission promulgated Rule 433, formally known as the "Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses", which "effectively abolished the [holder in due course] doctrine in consumer credit transactions". In 2012, the commission reaffirmed the regulation.
Assignment of contract rights
Assignment of rights under a contract is the complete transfer of the rights to receive the benefits accruing to one of the parties to that contract. For example, if Party A contracts with Party B to sell Party A's car to Party B for $10, Party A can later assign the benefits of the contract - i.e., the right to be paid $10 - to Party C. In this scenario, Party A is the obligee/assignor, Party B is an obligor, and Party C is the assignee. Such an assignment may be donative (essentially given as a gift), or it may be contractually exchanged for consideration. It is important to note, however, that Party C is not a third party beneficiary, because the contract itself was not made for the purpose of benefitting Party C. When an assignment is made, the assignment always takes place after the original contract was formed. An Assignment only transfers the rights/benefits to a new owner. The obligations remain with the previous owner. Compare Novation.
When assignment will be permitted
The common law favors the freedom of assignment, so an assignment will generally be permitted unless there is an express prohibition against assignment in the contract. Where assignment is thus permitted, the assignor need not consult the other party to the contract. An assignment cannot have any effect on the duties of the other party to the contract, nor can it reduce the possibility of the other party receiving full performance of the same quality. Certain kinds of performance, therefore, cannot be assigned, because they create a unique relationship between the parties to the contract. For example, the assignment of a legal malpractice claim is void since an assignee would be a stranger to the attorney-client relationship, who was owed no duty by the attorney and would imperil the sanctity of the highly confidential and fiduciary relationship existing between attorney and client.
Torts are not assignable as public policy, and various statutes may prohibit assignment in certain instances. In addition, the Restatement (Second) of Contracts lists prohibitions in §317(2)(a) based upon the effect to the nonassigning party (obligor), with similar prohibitions in the Uniform Commercial Code §2-210. For example, UCC §2-210 states the following:
|“||Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreementotherwise [sic].||”|
Requirements for an effective assignment
For assignment to be effective, it must occur in the present. No specific language is required to make such an assignment, but the assignor must make some clear statement of intent to assign clearly identified contractual rights to the assignee. A promise to assign in the future has no legal effect. Although this prevents a party from assigning the benefits of a contract that has not yet been made, a court of equity may enforce such an assignment where an established economic relationship between the assignor and the assignee raised an expectation that the assignee would indeed form the appropriate contract in the future.
A contract may contain a non-assignment clause, which prohibits the assignment of specific rights and some various rights, or of the entire contract, to another. However, such a clause does not necessarily destroy the power of either party to make an assignment. Instead, it merely gives the other party the ability to sue for breach of contract if such an assignment is made. However, an assignment of a contract containing such a clause will be ineffective if the assignee knows of the non-assignment clause, or if the non-assignment clause specifies that "all assignments are void".
Two other techniques to prevent the assignment of contracts are rescission clauses or clauses creating a condition subsequent. The former would give the other party to the contract the power to rescind the contract if an assignment is made; the latter would rescind the contract automatically in such circumstances.
Requirement of a writing
There are certain situations in which the assignment must be in writing.
- Assignment of wages; additionally, statutes may prohibit this assignment
- Assignment of any interest in real property
- Assignment of choses in action worth over $5,000
A parallel concept to assignment is delegation, which occurs when one party transfers his duties or liabilities under a contract to another. A delegation and an assignment can be accomplished at the same time, although a non-assignment clause may also bar delegation.
Legal remedies may be available if the nonassigning party's rights are affected by the assignment.
Assignments made for consideration are irrevocable, meaning that the assignor permanently gives up the legal right to take back the assignment once it has been made. Donative assignments, on the other hand, are generally revocable, either by the assignor giving notice to the assignee, taking performance directly from the obligor, or making a subsequent assignment of the same right to another. There are some exceptions to the revocability of a donative assignment:
- The assignment can not be revoked if the obligor has already performed
- The assignment can not be revoked if the assignee has received a token chose (chose being derived from the French word for "thing", as in a chose of action) - a physical object that signifies a right to collect, such as a stock certificate or the passbook to a savings account.
- The assignment can not be revoked if the assignor has set forth in writing the assignment of a simple chose - a contract right embodied in any form of token.
- Estoppel can prevent the revocation of a donative assignment if the assignee changed their position in reliance on the assignment.
Finally, the death or declaration of bankruptcy by the assignor will automatically revoke the assignment by operation of law.
Breach and defenses
A cause of action for breach on the part of the obligor lies with the assignee, who will hold the exclusive right to commence a cause of action for any failure to perform or defective performance. At this stage, because the assignee "stands in the shoes" of the assignor, the obligor can raise any defense to the contract that the obligor could have raised against the assignor. Furthermore, the obligor can raise against the assignee counterclaims and setoffs that the obligor had against the assignor. For example, suppose that A makes a contract to paint B's house in exchange for $500. A then assigns the right to receive the $500 to C, to pay off a debt owed to C. However, A does such a careless job painting the house that B has to pay another painter $400 to correct A's work. If C sues B to collect the debt, B can raise his counterclaim for the expenses caused by the poor paint job, and can reduce the amount owed to C by that $400, leaving only $100 to be collected.
When the assignor makes the assignment, he makes with it an implied warranty that the right to assign was not subject to defenses. If the contract had a provision that made the assignment ineffective, the assignee could sue the assignor for breach of this implied warranty. Similarly, the assignee could also sue under this theory if the assignor wrongfully revoked the assignment.
Occasionally, an unscrupulous assignor will assign exactly the same rights to multiple parties (usually for some consideration). In that case, the rights of the assignee depend on the revocability of the assignment, and on the timing of the assignments relative to certain other actions.
In a quirk left over from the common law, if the assignment was donative, the last assignee is the true owner of the rights. However, if the assignment was for consideration, the first assignee to actually collect against the assigned contract is the true owner of the rights. Under the modern American rule, now followed in most U.S. jurisdictions, the first assignor with equity (i.e. the first to have paid for the assignment) will have the strongest claim, while remaining assignees may have other remedies. In some countries, the rights of the respective assignees are determined by the old common law rule in Dearle v Hall.
- Earlier donative assignees for whom the assignment was revocable (because it had not been made irrevocable by any of the means listed above) have no cause of action whatsoever.
- Earlier donative assignees for whom the assignment was made irrevocable can bring an action for the tort of conversion, because the assignment was technically their property when it was given to a later assignee.
- Later assignees for consideration have a cause of action for breaches of the implied warranty discussed above.
Special rules for assignment of certain rights
See also: Rule in Dumpor's Case and Privity of estate
Real property rights can be assigned just as any other contractual right. However, special duties and liabilities attach to transfers of the right to possess property. With an assignment, the assignor transfers the complete remainder of the interest to the assignee. The assignor must not retain any sort of reversionary interest in the right to possess. The assignee's interest must abut the interest of the next person to have the right to possession. If any time or interest is reserved by a tenant assignor then the act is not an assignment, but is instead a sublease.
The liability of the assignee depends upon the contract formed when the assignment takes place. However, in general, the assignee has privity of estate with a lessor. With privity of estate comes the duty on the part of the assignee to perform certain obligations under covenant, e.g. pay rent. Similarly, the lessor retains the obligations to perform on covenants to maintain or repair the land.
If the assignor agrees to continue paying rent to the lessor and subsequently defaults, the lessor can sue both the assignor under the original contract signed with the lessor as well as the assignee because by taking possession of the property interest, the assignee has obliged himself to perform duties under covenant such as the payment of rent.
Unlike a Novation where consent of both the lessor and lesse is required for the third party to assume all obligations and liabilities of the original lessee, an assignment does not always need the consent of all parties. If the contract terms state specifically that the lessor's consent is not needed to assign the contract, then the lesee can assign the contract to whomever the lesee wants to.
Absent language to the contrary, a tenant may assign their rights to an assignee without the landlord's consent. In the majority of jurisdictions, when there is a clause that the landlord may withhold consent to an assignment, the general rule is that the landlord may not withhold consent unreasonably unless there is a provision that states specifically that the Landlord may withhold consent at Landlord's sole discretion.
A person can also assign their rights to receive the benefits owed to a partner in a partnership. However, the assignee can not thereby gain any of the assignor's rights with respect to the operation of the partnership. The assignee may not vote on partnership matters, inspect the partnership books, or take possession of partnership property; rather, the assignee can only be given the right is to collect distributions of income, unless the remaining partners consent to the assignment of a new general partner with operational, management, and financial interests. If the partnership is dissolved, the assignee can also claim the assignor's share of any distribution accompanying the dissolution.
Intellectual property rights
See also: transfer (patent)
Ownership of intellectual property, including patents, copyrights, and trademarks, may be assigned, but special conditions attach to the assignment of patents and trademarks. In the United States, assignment of a patent is governed by statute, 35 U.S.C. § 261. Patent rights are assignable by an "instrument in writing." Title in a patent can also be transferred as a result of other financial transactions, such as a merger or a takeover, or as a result of operation of law, such as in an inheritance process, or in a bankruptcy. An assignment of a patent can be recorded with the United States Patent and Trademark Office. Although such recording is not required, if an assignment is not recorded at the USPTO within three (3) months or prior to a subsequent assignment, the assignment will be void against a subsequent assignee without notice of the earlier, unrecorded assignment.
With respect to a trademark, the owner of the mark may not transfer ownership of the mark without transferring the goodwill associated with the mark.
Companies sometimes request from employees that they assign all intellectual property they create while under the employment of the company. This is typically done within an Employment Agreement, but is sometimes done through a specific agreement called Proprietary Information and Inventions Agreement (PIIA).
Personal injury torts
The standard rule is that personal injurytort causes of action are nonassignable as a matter of public policy. These should be distinguished from final settlements or judgments resulting from lawsuits brought on such causes of action, which may be assignable.
In the majority of jurisdictions, assignments of legal malpractice causes of action are void as against public policy.
An equitable assignment is an assignment, or transfer of rights, in equity.
There are numerous requirements that exist for an equitable assignment of property, outside the 'standard' clear and unconditional intention to assign. These requirements are fundamental characteristics of a statutory assignment: Absolute assignment (an unconditional transfer: conditions precedent or part of a debt are not absolute) and the assignment must be made in writing and signed by the assignor, and in particular, this applies to real property.
Assigning future property in equity cannot be gratuitous. The assignor must receive consideration for the agreement, otherwise the assignment will be ineffective. However, an absolute assignment does not require consideration to be given. Secondly, between the period of agreement between assignor and assignee and acquisition by the assignor, the assignees rights are not contractual, but rather a proprietary right to the property. This means the assignee has an interest in this future property, in the same manner any owner has over property.
In equity, these principles operate to protect both the assignor and the assignee. In Norman v Federal Commissioner of Taxation, a taxpayer attempted to assign by deed, to his wife certain moneys which he was eventually going to receive. This included dividends and interest due on loans. The court held the interest and the dividends were expectancies or possibilities which could not be assigned without consideration. The court's worry was that assignments without consideration might be used as instruments of fraud, to avoid creditors and tax collection.
Courts will not enforce a contract to assign an expectancy unless there is a valuable consideration. For example, under a settlement of property the respondent "the son" would have been entitled to an equal portion of properties along with his other siblings which was gained in a settlement by his mother. This portion was only his when allocated to him at his mothers discretion. Prior to this allocation being made, the respondent allotted his benefit to trustees for a voluntary settlement. He was assigning or purporting to assign something which he might become entitled to in the future, not a contingent interest. The judgment held it ineffective and elaborated on previous points to state the respondent cannot be compelled to allow the trustees to retain the appointed sum.
- ^For the assignment of claim see Trans-Lex.org
- ^Australian Law Dictionary (second ed.). oxford university press.
- ^ abcNorman v Federal Commissioner of Taxation HCA 21, (1963) 109 CLR 9, High Court (Australia).
- ^Tips and traps in contracting: novation versus assignmentArchived January 26, 2013, at the Wayback Machine.. Association for General Counsel. (Australia).
- ^ abAssignee Liability: Through the Minefield. Arnstein & Lehr LLP.
- ^See 15 U.S.C. 1641(a).
- ^ abCommercial Paper: Holder in Due Course & DefensesArchived 2012-11-28 at the Wayback Machine..
- ^FTC Opinion Letter Affirms Consumers' Rights under the Holder Rule. FTC.
- ^ abcdStark T. (2003). Negotiating and Drafting Contract Boilerplate, Ch. 3: Assignment and Delegation. ALM Publishing.
- ^Chapter 18: Assignment and Delegation. LexisNexis study outline.
- ^Uniform Commercial Code § 2-210. Delegation of Performance; Assignment of Rights.
- ^Pony v. County of Los Angeles, 433 F.3d 1138 (9th Cir. 2006).
- ^Cowan Liebowitz & Latman, PC v. Kaplan, 902 So. 2d 755, 759-760 (Fla. 2005).
- ^Westbourne Grammar School v Sanget Pty VSCA 39, Court of Appeal (Vic, Australia).
- ^Conveyancing Act 1919 (NSW) s 23C.
- ^Federal Commissioner of Taxation v Everett FCA 39, (1978) 21 ALR 625 at p. 643, Federal Court (Full Court) (Australia).
- ^Northumberland (Duke) v Inland Revenue Comrs