A deed of absolute sale and a deed of assignment both transfer property ownership from one party to another. People use a deed of absolute sale most often in a typical real property sale in which a buyer purchases a property from a seller. Bankruptcy courts most often use a deed of assignment to transfer property from the property owner to the bankruptcy court. Take a look to learn more about the deed of assignment versus absolute deed of sale meaning and better understand how these affect the parties involved.
What's a Deed of Assignment?
A deed of assignment occurs when a debtor transfers property to a creditor, usually a bankruptcy court trustee. The bankruptcy court trustee is then responsible for facilitating the sale of the property. Once the property sells, the trustee splits the proceeds equally among the creditors. The creditors then apply these proceeds to the debtor's outstanding balances.
Property Exclusion in Bankruptcy
Insolvent debtors are not required to complete a deed of assignment to the bankruptcy court. Bankruptcy courts often allow an exclusion for the insolvent debtor's primary home. Depending on the debtor's location, there may be a limit to the home equity allowed for the exclusion. However, the bankruptcy court may require insolvent debtors to complete a deed of assignment for additional real properties, such as second homes and vacation homes.
This means the insolvent debtor may keep his primary home – with consideration for any home equity limits – from inclusion in the bankruptcy proceedings. However, the bankruptcy court may require him to complete a deed of assignment on his secondary or vacation homes to sell and use the proceeds toward paying his creditors.
Absolute and Conditional Sales
Property sale transactions are typically either conditional or absolute.
Conditional sales occur when the transfer of the property from one party to another party will not be completed, and the title to the property will not be transferred until certain conditions of the sale contract are met either by the buyer or by the seller. For example, if a property has outdated plumbing, the buyer can require the seller to update the plumbing as a condition of the sale.
An absolute sale occurs when the sales contract has no conditions. This means that the property transfer will happen as long as the buyer pays the seller the amount of money agreed on.
Absolute Deed of Sale Meaning
To understand a deed of sale vs deed of absolute sale, know that a deed of absolute sale is a when a seller transfers or conveys the title of a property to the other party without condition except for the payment for the property. For example, a seller lists her property for $100,000, and a buyer comes along and gives her $100,000 for the property without requiring her to do anything to the property. A deed of absolute sale is completed, and the title of the property transfers from the seller to the buyer.