A service contract is a written agreement between the buyer and the party that stands behind it. When the house or vehicle is sold, the contract may stay with the item, stay with the first buyer, or end. The transfer clause says which. Read it before you sign the sale papers, because the answer changes what you are buying.
What to find in the clause
Check whether transfer is allowed at all. Check who must request it, the seller, the buyer, or the company named on the paper, and by what method. Check whether a transfer carries a charge, and where that charge is listed. Check the time limit for asking, because many contracts set one. Check whether the new owner gets the remaining term or a new term.
Ask the seller and the company
Ask the seller whether the contract is in the first buyer's name, and whether it has been recorded with the company. Ask the company, in writing, whether the contract transfers, under what conditions, and what proof it accepts. Keep the answer with the signed paper.
Cancellation after a sale
Find out who holds cancellation rights after a transfer. A contract that moves to a new owner may leave any refund with the first buyer, or it may follow the item. Read the cancellation terms that apply after transfer, not only the ones that apply at purchase.
Check the name against the roster
Find the company or obligor named on the paper and check that name against the state roster, if the state publishes one. The state pages on this site show who regulates these contracts, the statute or program cited, whether a roster is published, and the as-of date of the list. Where this edition has not read a state, the page says so.