An assumption agreement is a legal document that transfers the responsibility for a particular debt or liability from one person to another. This type of agreement is commonly used in situations where someone wants to transfer ownership of a property that has an existing mortgage or loan.

In essence, when someone assumes responsibility for a debt or liability, they are agreeing to make payments on that debt or liability as if it were their own. This means that if the original borrower defaults on the loan or does not make payments, the person who has assumed responsibility for the debt or liability will be held accountable.

An assumption agreement is typically used when a property is sold or transferred to a new owner. For example, if someone sells their home to another person, they may choose to have the buyer assume responsibility for the existing mortgage on the property. This allows the seller to transfer ownership of the property without having to pay off the entire mortgage themselves.

In order for an assumption agreement to be legally binding, it must be approved by the lender who holds the original debt or liability. This is because the lender wants to ensure that the new borrower is able to make payments on the debt or liability.

It is important to note that not all loans or liabilities can be assumed. For example, some mortgages may have a due-on-sale clause, which means that the entire mortgage must be paid off if the property is sold. In these cases, an assumption agreement would not be possible.

In summary, an assumption agreement is a legal document that allows someone to transfer responsibility for a debt or liability to another person. It is commonly used in real estate transactions and must be approved by the lender in order to be binding.