Key Considerations When Negotiating Original Purchase Agreement

Long (90 days or more) due diligence period to allow for the completion of due diligence with time remaining thereafter to find a subsequent purchaser prior to the expiration of the unilateral purchaser termination right.
Limited confidentiality provisions that would restrict ownership or transfer of due diligence materials.
No representations or covenants made on behalf of the original purchaser restricting or prohibiting subsequent purchase agreements prior to closing.
Broad purchaser unilateral assignment provisions.
Allocation of closing costs that will be acceptable to a subsequent purchaser, so that the new purchaser will agree to close directly with the seller.

Key Consideration When Negotiating New Purchase Agreement

Timing – which is likely the most important. The original purchaser will be at risk if it is required to act under the original purchase agreement prior to knowing whether (1) the new purchaser will move forward with the transaction; or (2) the new purchaser will require any special requirements (i.e., title, zoning, or approvals) in connection with closing under the new purchase agreement.
Representations and warranties must be limited on behalf of the original purchaser, as it does not own the property and is not in a position to make standard representations. The representations and warranties are often the most negotiated point under this structure. The new purchaser will seek to obtain a full list of representations, but the original purchaser is not in a position to provide such representations without a level of risk.
As previously stated, having a clear election that can be invoked by the original purchaser that causes the new purchaser to close directly with the seller to avoid title passing through the original purchaser and double transfer tax.

There are obviously numerous caveats to the above considerations, each of which must be thoroughly examined in combination with the property and the parties involved when contemplating or choosing an "assignment fee" structure. However, if negotiated correctly, money can be made without ever closing on a property, or at a minimum, costs can be mitigated if a transaction is no longer desired.

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Want to Back Out of a Real Estate Deal? Consider This Structure

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