Recent legal trends have seen an increase in the assignment of rights acquired under Promise of Sale Agreements. In a typical Deed of Assignment, the Assignor transfers and passes all the rights acquired under the Promise of Sale Agreement onto the Assignee who in turn agrees to acquired those rights and to adhere to all the obligations included in the original agreement’s condition. By so doing, the Assignor assumes the role of purchaser vis-à-vis the vendor.
The Legal Notice 191 of 2020, focuses mainly on the fiscal implications and the fundamental requirements for an assignment to be valid, such as the necessity for the assignment to be in writing and signed before a notary or lawyer.
A crucial legal principle in this context is “nemo plus iuris ad alium transferre potest quam ipse habet” (no one can transfer more rights than they have), also known as the nemo dat rule. This rule asserts that:
- A person cannot transfer a better title than that which they themselves possess.
- A transferee takes subject to all existing real rights and inherent weaknesses in the subject right.
Implications for the Assignees
Given this principle, the following implications are applied to the Assignee:
- Rights and Obligations Transfer: The Assignee acquires all the rights and obligations that Assignor holds under the Promise of Sale Agreement, including the right to further assign these rights to third parties, unless not specifically hindered from making further assignments in the Deed of Assignment.
- Subject to Existing Conditions: The rights transferred are subject to all the terms and conditions that the Assignee was subject to, including any inherent limitations or weaknesses, including the manner in which fiscal obligations should be regulated in subsequent assignments.
Conclusion
Understanding and applying the nemo plus rule is essential when dealing with the assignment of rights and obligations in legal agreements. This principle ensures that the rights transferred in any assignment are subject to the existing terms and cannot surpass the original party’s rights. Consequently, parties involved in such transactions can confidently proceed with the assignment, knowing they are bound by the same conditions and limitations as the original holder. This legal safeguard maintains the integrity of the rights and obligations throughout the assignment process.
Av. Rossana Farrugia
Associate
Mifsud & Mifsud Advocates
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