In Nigeria, certain documents and legal terms are necessary for any real estate transaction. If you are familiar with real estate jargons, you must have seen these two key terms: “Deed of Assignment” and “Contract of Sale.” Whether you’re a real estate agent, owner, or fan, you should be aware of the main distinctions between the two contracts. 

This article will explain the differences between a deed of assignment and a contract of sale. Furthermore, we will discuss how important they are to the Nigerian real estate market.

Contract of Sale and Deed of Assignment: Their Meanings and Significance

A Contract of Sale is a legally binding agreement between a seller and a buyer in a real estate transaction. It contains the criteria that both parties agreed on for the sale of a property. Important information is contained in it.

This information can include the price of the property, the payment schedule that has been agreed upon, and any special terms that have been discussed by the buyer and seller. Look at it like the sales plan. It explains what each party is getting into and shows them how to proceed with the transaction. 

In Nigeria, the Contract of Sale is a legally binding document that sets down the parties’ respective rights and obligations. The buyer and seller negotiate the terms of the sale at the beginning of a real estate transaction, which is when the document is usually encountered. It is essential in laying the groundwork for the property transfer procedure.

Conversely, a Deed of Assignment has a distinct function from a Contract of Sale. This formal transfer of ownership from the seller (referred to as the assignor) to the buyer (referred to as the assignee) is accomplished through the use of this document. It is essentially the official documentation of the property rights transfer.

The Deed of Assignment is all about formalizing the transfer of property ownership, whereas the Contract of transaction concentrates on the terms and conditions of the transaction. In the context of real estate transactions, it guarantees the irreversible transfer of property ownership from one party to another.

Typically, when the property is prepared to be transferred, then you come across the Deed of Assignment. It represents the completion of the deal between the property’s buyer and seller.

12 Key Differences between a Contract of Sale and a Deed of Assignment

In the context of Nigerian real estate transactions, these 12 distinctions serve to make clear the different functions and ramifications of a Contract of Sale and a Deed of Assignment.

1. The Document’s Purpose 

A Contract of Sale is the first agreement made in a real estate deal. The terms and conditions that have been negotiated and agreed upon by the buyer and vendor are listed in it. On the other hand, a Deed of Assignment is the official record of the transfer of property ownership. It is the proof of property’s ownership transfer from the seller (assignor) to the purchaser (assignee). Rather than being a document for negotiation, it is the final step in the transfer process.

2. Time of Issuance or Execution 

The Contract of Sale is signed during the negotiation phase between the buyer and seller. The buyer and seller determine the terms of the sale in this formal contract. 

In contrast, after the deal is prepared for closing, the Deed of Assignment is executed. This signifies the official transfer of property ownership. At the end, it guarantees that the buyer has become the property’s legitimate owner.

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3. Legal Implications

A Contract of Sale establishes the terms and conditions of the sale. It does not directly address property ownership in law. It just outlines each party’s responsibilities.

On the other hand, the Deed of Assignment is quite important in terms of the law. It cannot be enforceable unless it is properly registered and stamped. Parties must follow the law meticulously here.  That ensures that property ownership is transferred in a legal manner. Breaking it could lead to disputes.

4. The Content

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

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

5. Proof of Ownership Transfer

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

6. Revocability

If both parties approve of the modifications, you can alter or cancel a contract of sale. Because of this flexibility, you can still make changes to the terms if need be during the negotiation stage. On the other hand, once you write a Deed of Assignment, you can’t undo it. There is no turning back this transfer of ownership, which is final and enforceable by law.

7. Registrability

You don’t necessarily need to register the Contract of Sale. However, some parties may choose to do so. On the flip side, a you need to properly register and stamp Deed of Assignment with the appropriate government bodies. The registration process legally confirms the transfer of the property.

8. Enforceability 

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

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

9. Transfer of Liabilities

The transfer of responsibilities or liabilities relating to the property is usually not covered by the selling contract. The selling’s conditions and terms are its main focus. But, a Deed of Assignment may include provisions enabling the seller to assign debts, including real estate taxes, to the buyer. Certain property-related duties may have designated individuals in charge in this document.

10. Public Access

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

11. Impact on Property Rights

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

12. Negotiation vs. Finalization

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

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

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Now, we’ve answered the question “What is the difference between a Contract of Sale and a Deed of Assignment?” Successful real estate deals depend on your ability to recognize these distinctions. The Deed of Assignment completes the ownership transfer of the property, whilst the Contract of Sale establishes the conditions. Knowing these distinctions gives you the power to make wise judgments, whether you’re settling on terms, sealing a contract, or just looking for clarification.

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