What is an 'Assignment'
An assignment is the transfer of an individual's rights or property to another person or business. For example, when an option contract is assigned, an option writer has an obligation to complete the requirements of the option contract. If the option was a call, or put, option, the writer would have to sell, or buy, the underlying security at the stated strike price.
BREAKING DOWN 'Assignment'
Assignment means transferring some or all property rights and obligations to another person through a written agreement. For example, a payee assigns rights for collecting note payments to a bank. A trademark owner transfers, gives or sells another person interest in the trademark. To be effective, an assignment must contain parties with legal capacity, consideration, consent and legality of object.
Examples of Assignment
A wage assignment is a forced payment of an obligation by automatic withholding from an employee’s pay. Courts issue wage assignments for people late with child or spousal support, taxes, loans or other obligations. Money is automatically subtracted from a worker's paycheck without consent if the obligor has a history of nonpayment. For example, a person delinquent on $100 monthly loan payments has a wage assignment deducting the money from his paycheck weekly or monthly and sent to the lender. Wage assignments are helpful in paying back long-term debts.
A mortgage assignment is where a mortgage deed gives a lender interest in a mortgaged property in return for payments received. Lenders often sell mortgages to third parties, such as other lenders. A mortgage assignment document clarifies the assignment of contract and instructs the borrower in making future mortgage payments and potentially modifying the mortgage terms. A mortgage assignment is beneficial for a seller with a home on the market long term and for a buyer not wanting to secure a bank loan. Many real estate companies facilitate mortgage assignments in this situation.
A lease assignment benefits a relocating tenant wanting to end a lease early or a landlord looking for rent payments to pay creditors. Once the new tenant signs the lease taking over responsibility for rent payments and other obligations, the previous tenant is released from those responsibilities. In a separate lease assignment, a landlord agrees to pay a creditor through assignment of rent due under rental property leases. The agreement is used to pay a mortgage lender if the landlord defaults on the loan or files bankruptcy. Any rental income is paid directly to the lender.