Assignment of rights acquired under a promise of sale agreement

Abstract

The aim of this report is to assess existing legislation regulating the Assignment of Rights Acquired Under a Promise of Sale Agreement, to determine any gaps in existing regulation and to propose a way forward. The intention is to look into legal consequences and implications imposed on the parties to the agreement, analyse the current laws and regulations regularising the concept of an assignment of rights and include ideas for new laws and ways of further regularising it. Research will also focus on rights and duties emanating from the agreement and lack of them. Firstly, and in general, the study will highlight by way of an introduction the provisions relating to promise of sale agreements and the notary’s obligations emanating from them. For the most part, promise of sale agreements of an immovable property used to be clear cut; that is, between a Vendor and prospective buyer/purchaser. However, in recent years it has become a common occurrence for third parties to intervene in the early stages of a promise of sale agreement whereby the original purchaser, now assignor, cedes his rights emanating from the promise of sale agreement to the assignee, who becomes the new purchaser. In particular, the study will look into the rights and duties of all the parties emanating from the assignment of rights, including duties and taxes owed. Furthermore, the study will also focus on the legal implications and consequences of an assignment of rights and the laws and regulations currently regularising it. The study will try to identify any lacunae in the law and suggest amendments to the current laws regulating the assignment of rights emanating from a promise of sale of an immovable property. Reference is to be made to various laws and regulations including but not limited to the Civil Code, Income Tax Act, Legal Notice 191 of 2020 and the Budget Measures Implementation Act. The report will to be divided into five chapters. By way of an introduction, the first chapter will focus on promise of sale agreements, their features and the rights and obligations emanating from it. This chapter will also look into general clauses usually agreed to in a promise of sale agreement. The second chapter will introduce the concept of an assignment of rights and its consequences particularly by assessing current laws and regulations controlling this concept. Legal Notice 191 of 2020 amended the previous laws and regulates assignment of rights agreed upon on 1st January 2020 and after. Chapter three will focus on the rights and duties of all the parties to the assignment of rights, including the vendor, the assignor and the assignee. More specifically, focus is to be given on provisory taxes, specifically those paid by the original purchaser, now assignor, on the initial promise of sale agreement and on what happens to such taxes after the final deed. The report will also delve into the idea of new duties which could help regulate the abuse of the concept of an assignment of rights. The fourth chapter will focus on the implications and legal consequences arising out of the assignment of rights and answer the question of whether such agreements should be even more closely regularised. This chapter would aim at identifying any lacunae in current laws and regulations and suggest amendments or introductions of legislations. The fifth and final chapter will then bring together the whole research and provide a concluding argument. Since assignments of rights are still a modern concept, it has proven to be quite difficult to find sources for the research, therefore, most of the report is based on hands on experience during notarial traineeship. The report will look into difficulties usually faced on different assignments of rights agreements and also suggest new ways of avoiding such difficulties while also benefitting the parties.