How to Draft a Deed of Assignment

A deed of assignment is a formal legal document executed as a deed, which means it must comply with specific execution requirements including witnessing. Deeds have certain legal advantages over ordinary assignment agreements, including longer limitation periods for enforcement and the ability to be binding even without consideration (payment or exchange of value). In construction law contexts, deeds of assignment are preferred because they provide greater certainty and enforceability, particularly important when transferring significant contractual rights such as progress payment entitlements or security of payment claims.

No, not all construction contract rights are freely assignable. Many construction contracts contain anti-assignment clauses that prohibit or restrict assignment without the consent of the other party. Even without an express anti-assignment clause, some rights are considered personal in nature and cannot be assigned. Before drafting a deed of assignment, it's essential to review your construction contract carefully to identify any assignment restrictions and determine whether consent is required.

Failure to provide proper notice of assignment can have serious consequences. Without notice, the obligor under the original contract can continue to perform and make payments to the assignor, and these payments will discharge their obligations even though the rights have been assigned. The assignee would then need to recover the payments from the assignor. Proper notice is particularly important for security of payment rights, as the obligor needs to know who is entitled to serve payment claims and receive progress payments.

Deeds of assignment can transfer Security of Payment Act rights, but specific legislative requirements apply. In NSW, Victoria, Queensland, and Tasmania, the assignee generally steps into the assignor's shoes for serving payment claims and commencing adjudication. However, the assignment must occur before the relevant payment claim is served. The timing of assignment relative to the reference date for payment claims is crucial. Specialist construction law advice ensures your deed of assignment properly addresses these implications.

A deed of assignment primarily transfers rights rather than obligations. Generally, you cannot unilaterally transfer liability for defects or obligations to complete work without the consent of the other party to the original contract. If you want both rights and obligations transferred, you typically need a novation agreement, where all three parties agree to substitute the assignee for the assignor. The interaction between assigned rights, continuing obligations, and statutory warranties under building legislation is complex.

The timeframe varies depending on complexity. For straightforward assignments with no consent requirements, a specialist lawyer can typically draft the deed within 2-3 business days. If third-party consents are required from principals, head contractors, or financiers, the overall timeframe extends depending on their response times. Complex assignments involving disputes or multiple parties may take 1-2 weeks.