Also known as: transferee's liability · transferees' liability
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
Liability imposed on a recipient of transferred property for taxes owed by the transferor. The liability is capped at the value of the assets received.
Personal obligation undertaken by a transferee of leased or mortgaged property who expressly promises to perform the transferor's duties under the lease or mortgage. The obligation rests on privity of contract or the assumption agreement and survives a later transfer by the transferee.
Each sense below has its own examples, sources, and questions.
Liability imposed on a recipient of transferred property for taxes owed by the transferor. The liability is capped at the value of the assets received.
No. Transferee liability for unpaid taxes is limited to the value of the property transferred.
Personal obligation undertaken by a transferee of leased or mortgaged property who expressly promises to perform the transferor's duties under the lease or mortgage. The obligation rests on privity of contract or the assumption agreement and survives a later transfer by the transferee.
Tara Tran leased rooftop space to United Wireless under a lease requiring periodic antenna upgrades. United assigned the lease to Allied Wireless in a writing in which Allied expressly assumed all tenant obligations. Allied later assigned the lease to Swift Wireless. When Swift failed to perform the upgrades, the landlord sued Allied. Allied's express assumption created contractual privity that continued after the second assignment.
NovaBio Labs sold its mortgaged campus to HorizonPharm. In a signed side letter HorizonPharm promised to assume the loan up to thirty million dollars and left any excess with NovaBio. After default and foreclosure produced a forty-five million dollar deficiency, the lender sued HorizonPharm personally. HorizonPharm's personal liability was capped at the thirty million dollar limit stated in the assumption agreement.
Yes. When a transferee expressly promises to perform lease obligations, the resulting contractual liability continues after any subsequent transfer unless the landlord affirmatively relieves the obligor.
No. The lender may enforce the assumption only according to its terms, so personal liability is limited to the cap or scope the transferee actually promised.