what is a condo assignment sale

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10 Essential Things to Know About Real Estate Assignment Sales (for Sellers)

— We take our content seriously. This article was written by a real person at BREL.

What’s an assignment?

An assignment is when a Seller sells their interest in a property before they take possession – in other words, they sell the contract they have with the Builder to a new purchaser. When a Seller assigns a property, they aren’t actually selling the property (because they don’t own it yet) – they are selling their promise to purchase it, along with the rights and obligations of their Agreement of Purchase and Sale contract.  The Buyer of an assignment is essentially stepping into the shoes of the original purchaser.

The original purchaser is considered to be the Assignor; the new Buyer is the Assignee. The Assignee is the one who will complete the final sale with the Builder.

Do assignments only happen with pre-construction condos?

It’s possible to assign any type of property, pre-construction or resale, provided there aren’t restrictions against assignment in the original contract. An assignment allows a Buyer of a any kind of home to sell their interest in that property before they take possession of it.

Why would someone want to assign a condo?

Often with pre-construction sales, there’s a long time lag between when the original contract is entered into, when the Buyer can move in (the interim occupancy period) and the final closing. It’s not uncommon for a Buyer’s circumstances to change during that time…new job out of the city, new husband or wife, new set of twins, etc. What worked for a Buyer’s lifestyle 4 years ago doesn’t always work come closing time.

Another common reason why people want to assign a contract is financial. Sometimes, the original purchaser doesn’t have the funds or can’t get the financing to complete the sale, and it’s cheaper to assign the contract to a new purchaser, than it is to renege on the sale.

Lastly, assignment sales are also common with speculative investors who buy pre-construction properties with no intention of closing on them. In these cases, the investors are banking on quick price appreciation and are eager to lock in a profit now, vs. waiting for the original closing date.

What can be negotiated in an assignment sale?

Because the Assignee is taking over the original purchaser’s contract, they can’t renegotiate the price or terms of the contract with the Builder – they are simply taking over the contract as it already exists, and as you negotiated it.

In most cases, the Assignee will mirror the deposit that you made to the Builder…so if you made a 20% deposit, you can expect the new purchaser to do the same.

Most Sellers of assignments are looking to make a profit, and part of an assignment sale negotiation is agreeing on price. Your real estate agent can guide you on price, which will determine your profit (or loss).

Builder Approval and Fees

Remember that huge legal document you signed when you made an offer to buy a pre-construction condo? It’s time to take it out and actually read it.

Your Agreement of Purchase & Sale stipulated your rights to assign the contract. While most builders allow assignments, there is usually an assignment fee that must be paid to the Builder (we’ve seen everything from $750 to $7,000).

There may be additional requirements as well, the most common being that the Builder has to approve the assignment.

Marketing Restrictions

Most pre-construction Agreements of Purchase & Sale from Toronto Builders do not allow the marketing of an assignment…so while the Builder may give you the right to assign your contract, they restrict you from posting it to the MLS or advertising it online. This makes selling an assignment extremely difficult…if people don’t know it’s available for sale, how they can possibly buy it?

While it may be very tempting to flout the no-marketing rule, BE VERY CAREFUL. Buyers guilty of marketing an assignment against the rules can be considered to have breached the Agreement, and the Builder can cancel your contract and keep your deposit.

We don’t recommend advertising an assignment for sale if it’s against the rules in your contract.

So how the heck can I find a Buyer?

There are REALTORS who specialize in assignment sales and have a database of potential Buyers and investors looking for assignments. If you want to be connected with an agent who knows the ins and outs of assignment sales, get in touch…we know some of the best assignment agents in Toronto.

What are the tax implications of real estate assignment?

Always get tax advice from a certified accountant, not from the internet (lol).

But in general, any profit made from an assignment is taxable (and any loss can be written off). The new Buyer or Assignee will be responsible for paying land transfer taxes and any HST that might be due.

How much does it cost to assign a pre-construction condo?

In addition to the Builder assignment fees, you will likely have to pay a real estate commission (unless you find the Buyer yourself) and legal fees. Because assignments are more complicated, you can expect to pay higher legal fees than you would for a resale property.

How does the closing of an assignment work?

With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between the Assignee and the Builder. With the first closing (the assignment closing) the original purchaser receives their deposit + any profit (or their deposit less any loss) from the Assignee. On the second closing (between the Builder and the Assignee), the Assignee pays the remaining amount to the Builder (usually with the help of a mortgage), and pays land transfer taxes. Title of the property transfers from the Builder to the Assignee at this point.

I suppose it could be said that there is a third closing too, when the Buyer takes possession of the property but doesn’t yet own it…this is known as the interim occupancy period. The interim occupancy occurs when the unit is ready to be occupied, but not ready to be registered with the city. Interim occupancy periods in Toronto range from a few months to a few years. During the interim occupancy period, the Buyer occupies the unit and pays the Builder an amount roughly equal to what their mortgage payment + condo fees + taxes would be. The timing of the assignment will dictate who completes the interim occupancy.

Assignments vs. Resale: Which is Better?

We often get calls from people who are debating whether they should assign a condo they bought, or wait for the building to register and then sell it as a typical resale condo.

Pros of Assigning vs. Waiting

• Get your deposit back and lock in your profit sooner
• Avoid paying land transfer taxes
• Avoid paying HST
• Maximize your return if prices are declining and you expect them to continue to decline
• Lifestyle – sometimes it just makes sense to move on

Cons of Assigning vs Waiting

• The pool of Buyers for assignment sales is much smaller than the pool of Buyers for resale properties, which could result in the sale taking a long time, getting a lower price than you would if you waited, or both.
• Marketing restrictions are annoying and reduce the chances of finding a Buyer
• Price – What is market value? If the condo building hasn’t registered and there haven’t been any resales yet, it can be difficult to determine how much the property is now worth. Assignment sales tend to sell for less than resale.
• Assignment sales can be complicated, so you want to make sure that you’re working with an agent who is experienced with assignment sales, and a good lawyer.

Still thinking of assignment your condo or house ? Get in touch and we’ll connect you with someone who specializes in assignment sales and can take you through the process.

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Raj Singh says:

What can be things to look for, especially determining market value for an assigned condo? I’m the assignee.

Sydonia Moton says:

Y would u need a lawyer when u buy a assignment property

Gideon Gyohannes says:

Good clear information!

Who pays the assignment fee to the developer? Assignor or Assignee?

Thanks Gideon 416 4591919

Melanie Piche says:

It’s almost always the Seller (though I suppose could be a point of negotiation).

Fiona Rourke says:

If there are 2 names on the agreement and 1 wants to leave and the other wants to remain… does the removing of 1 purchaser constitute an assignment

Brendan Powell says:

An assignment is one way to add or remove people from a contract, but not the only way…and not the simplest. Speak to your lawyer for advice on what makes the most sense for your specific situation. For a straightforward resale purchase you could probably just do an amendment signed by all parties. If it’s a preconstruction purchase with various deposits paid, etc it could be more complicated.

Katerina says:

Depends on the Developer. Some of them remove names via assignments only.

Haroon says:

Is there any difference in transaction process If assigner or seller of a pre constructio condo is a non resident ? Is seller required to get a clearance certificate from cRA to complete the transaction ?

Nathalie says:

Hello , i would like to know the exact steps for reassignment property please.

Amazing info. Thanks team. I may just touch base with you when my property in Stoney Creek is completed in. 2020. I may need to reassign it to someone Thanks

Victoria Bachlowa says:

If an assignor renegs on the deal and refuses to close because they figured out they could get more money and the assignment was already approved by the builder and all conditions fulfilled what can the Assignee do. I have $33,000 dollars in trust in the real estate’s trust fund. They sent me a mutual release which I have not signed. The interim occupancy is Feb. 1 and the closing is schedule for Mar. 1, 2019. I have financing in place, was ready to move in Feb. 1 and I have no where to live.

Definitely talk to your lawyer right away. They’ll want to look at your agreement of purchase and sale and will be able to advise you.

With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between the Assignee and the Builder. With the first closing (the assignment closing) the original purchaser receives their deposit + any profit (or their deposit less any loss) from the Assignee. Can I assume that these closing happen at the same time? I’m not sure how and when I would be paid as the Assignor.

What happens to the deposits or any profits already paid if the developer cancels the project after an assignment?

Hi, Did you get answer to this? I did an assignment sale last year and now the builder is not completing apparently and they are asking for their money back. Can they do that? After legal transactions, the lawyer simply said “the deal didn’t go through”. Apparently builder and the person who assumed the assignment agreed on taking out the deal. What do I have to pay back after it was done a year ago

This is definitely a question for your lawyer – as realtors we are not involved in that part of the transaction. I would expect that just as the builder would have to refund your deposits, you would likely need to do the same…but talk to your lawyer. As to whether the builder can cancel a project, yes they always reserve that right (but the details of how and under what circumstances would be in your original purchase agreement). It’s one of the annoying risks in buying preconstruction!

I completed the sale of my assignment in Dec 2015 however the CRA says I should be reporting the capital income in 2016 when the assignee closed his deal with the developer in July 2016. That makes no sense to me since I got all my money in Dec 2015. Can you supply any clarification on that CRA policy please?

You’d have to talk to the CRA or an accountant – we’re real estate agents,so we can’t give tax advice.

Hassan says:

Hello, You said that there are two closings. The first one between the assignor and the assignee and the second one between the builder and the new buyer (assignee). My question is that in the first closing does the assignee have to pay the assignor the deposit they have paid and any profit in cash or will the bank add this to the assignee’s mortgage?

The person doing the assigning usually gets their money at the first closing.

Kathy says:

What is the typical real estate free to assign your contract with the builder ?

Hi Kathy While we do few assignments (as they are rarely successful, and builders do not make it easy), in past we have charged more or less the same as we do for a typical resale listing. While there are elements to assignments that should be easier than a resale (eg staging), many other aspects of assignments are much MORE time-consuming, and the risk much higher since attempts to find a buyer for assignments are often unsuccessful. It’s also important to note that due to the extra complication, lawyer’s fees to assign are typically higher than resale as well–although more $ for the purchase side vs the sale side.

Mitul Patel says:

If assignee has paid small amount of deposit plus the original 25% deposit that the assignor has paid to the builder and gets the Keys to the unit since interim possession has been completed, when the condo registration is done and assignee is getting mortgage from the Bank or Pays the remaining balance to the Builder using his savings and decides not to pay the Balance of the Profit amount to Assignor, what are the possibilities in this kind of scenario?

You’d need to talk to a lawyer to find out the options.

David says:

How much exactly do brokers get paid at sale of Assignment? i.e. Would the broker’s fee be a % of your assignment selling price or your home’s selling price? I’m really looking for a clear answer.

I am using this website’s calculator associated with selling your home in Ontario. But there is no information on selling assignments. https://wowa.ca/calculators/commission-calculator-ontario

Realtors set their own commission, so there is no set fee- that website is likely the commission that that agent offers. We often see commissions of 4-5% for assignments. The fee is a % of the price of the assignment – for example, you originally bought for $500K; you’re now assigning for $600K – commission would be payable on the $600K.

Candace says:

Question: if i bought a pre construction condo, can i sell it as soon as it closes or do i have to live in it for 1 year after closing in order to avoid capital gains taxes?

Or does the 1 year start as soon as you move in?

I would suggest you talk to your accountant re: HST credit implications and capital gains, but if you sell it for more than you paid for it, capital gains usually apply.

You mention avoid paying HST when you assign your property. What is the HST based on? It’s not a commercial property that you would pay HST. Explain. Thanks.

HST and assignments are complex and this question is best answered specific to your situation by your accountant and real estate lawyer. In some cases HST is applicable on assignment profits – more details can be found on the CRA website here:

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/gi-120/assignment-a-purchase-sale-agreement-a-new-house-condominium-unit.html

If you are a podcast listener, the true condos podcast is also a great resource.

https://truecondos.com/cra-cracking-down-on-assignments/

heres one for your comment, purchase pre construction from builder beginning of 2021, to be finished end of 2021, (semi detached) here we are end of 2022, both units are now ready. Had one assigned but because builder didnt accept within certain time frame(they also had a 90 day clause wherein we couldnt assign prior to 90 less firm closing date (WHICH MOVED 4 TIMES). Anyrate now we have a new assinor but the builder says we are in default from the first one and wants 50k to do the assignment (the agreement lists the possibility of assigning for 12k) Also this deal would include us loosing our whole deposit and paying the 12k(plus fees) would be in addition too the 130k we are already loosing. The second property we are trying to close but interest rates are riducous, together with closing costs(currently mortgage company is asking that my wife be added to that one, afraid to even ask this builder. Any advice on how to deal with this asshole greedy builder? We are simply asking for assignment as per contract and a small extension for the new buyer(week or two) Appreciate any advice. Thank you

Dealing with builders/developers can be extremely painful, much worse than resale transactions in our experience. Their contracts are written to protect THEM. Unfortunately all I can say is follow the advice of your lawyer.

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A Comprehensive Guide To Selling Your Assignment Condo

Trying to resell your preconstruction condo before closing? This blog is for you. Assignment sales are more complicated compared to their resale counterparts, but with some guidance, the process is easy. 

An assignment sale is a sale where the original buyers of a condo or home resell their contract to another buyer before closing. The most common type of assignment is a preconstruction condo assignment. Preconstruction condo assignments are prevalent because of the time lag between purchasing the home and the move-in date. While condo assignments might be the most popular type of assignment, any real estate contract is assignable. This blog is going to discuss condo assignments since they are the most prevalent, but *most* of the details apply to assigning a home or commercial preconstruction property as well.

In the GTA, our preconstruction market is booming. Toronto alone sees around 30,000 new home completions a year. Around 70% of preconstruction purchasers are investors. The remaining 30% of buyers are end-users who plan to use the property themselves. However, many investors, and end-users, might decide to sell the property before the final closing. Since there is no title to transfer, these buyers have to assign their contract to the next buyer. 

What is a preconstruction condo assignment sale?

An assignment is when the original buyers of a preconstruction condo decide to sell their contract with the builder to another buyer before the home is complete. This differs from a regular real estate transaction because we are not buying or selling a home, rather we are buying or selling an interest in a contract to purchase a home once it’s complete. Essentially, the buyers are taking over the seller’s place in the contract with the builder. The new buyer pays the seller their deposits back, as well as any profit. In trying times, there might not be profit, and in extreme cases, the sellers might walk away from their deposits.

Assignments are like the wild-west equivalent of real estate. The buyers are called assignees, the sellers are called assignors, and there is no fixed closing date! You heard that right, the buyer purchases the contract not knowing whether it will close in 4 weeks, 6 weeks, or 8 weeks. In many cases, the buyers only have a rough estimate for the final closing of the property as well.

Every builder’s agreement of purchase and sale is different, so every assignment sale is different. You need legal and accounting advice before, during, and after an assignment sale. A real estate agent’s job in the transaction is to find a buyer, negotiate the contract, and coordinate the sale from start to finish. Your real estate agent might also connect you with accountants, and lawyers who can help make the necessary legal and tax declarations.

The Builder’s Role In Assignments:

Sellers often misinterpret their rights to assign in their purchase agreements with their builder. In the showroom, builders are quick to say their contract is assignable if you want to flip your contract before closing. However, builders can control when, how, and to whom you sell your contract.

It’s important to follow the rules set out by your builder when marketing your assignment. Deviating from the builder’s purchase contract can result in you losing your deposits!

Since all preconstruction home assignments require the builder’s consent, it’s important to prepare the file for their consent at your earliest convenience. The builder will want the same information they collected from you when you first purchased the home: full names, current address, sin, IDs (front and back), telephone number, emails, mortgage pre-approval letter,  lawyer information… they will also want the buyer to replace all your cheques. Those could be cheques for future deposits, or cheques for interim occupancy fees. It’s important to advise the buyers to prepare all of this information before submitting the file to the builder, so there is limited delay assigning the property.

How do you sell an assignment condo?

The first step to selling your assignment is to review your original purchase agreement. The builder’s purchase agreement outlines restrictions and fees associated with assignments. An experienced realtor or lawyer can also review the contract with you. Next, email your builder’s customer service account and ask for permission to advertise the property for sale.

It’s important to thoroughly understand your preconstruction agreement, because some incentives offered to you might not be transferable to the buyer. Builders often offer incentives to direct buyers to stimulate sales. However, they sometimes make these incentives non-transferable. That could mean the free design dollars, or the capped development levies might not be available to the next buyer. It’s important not to advertise incentives that aren’t transferable.

The second step is to hire a Realtor to advise you on current market conditions. Your realtor will discuss marketing options as well as help you decide on a market price. There is a strong chance the builder will prohibit MLS listings of their properties. However, many builders will allow online marketing in places like Facebook, Instagram, WhatsApp, and brokerage websites.

While Realtor.ca is the best marketing platform out there, buyers looking for assignments know to look elsewhere. Don’t worry if you cannot market on realtor.ca. One of the advantages of Sotheby’s International Realty Canada is our vast marketing platform outside of Realtor.ca

Important Dates:

The first date you need to consider is the assignment closing date. This is the date the assignee officially takes over the contract from the assignor. On average, assignment closing happens within 3-6 weeks after an offer is accepted. This is when the assignee becomes the new owner of the property, and the assignee receives some of their deposit/profit back.

The second date to consider is the interim occupancy date. When buying preconstruction condos, there is usually a period between when the unit is ready for occupancy and before the building has registered with the city. Since no title exists yet, you cannot get a mortgage. Instead, during this time, you move in and pay the builder rent until final closing. Interim occupancy can last from months to years. During interim occupancy, buyers have the chance to view the unit which could help sell the home. Interim occupancy is when most assignment sales take place.

The third date you need to know is the final closing date. This is the date that the building registers with the city and the assignee pays the builder the balance of the purchase price, land transfer taxes, closing costs etc. Sometimes, assignees will negotiate to pay some of the assignors profit on final closing date, so they can roll it into the mortgage.

What Is Negotiable During An Assignment Sale:

Since the contract with the builder is already firm and binding, there can be no changes to that contract. The buyer is merely stepping into the seller’s shoes, in exchange for their deposits and profits. The assignment contract negotiates the purchase price and the deposit structure. The purchase price will indicate how much profit (or loss) the assignor receives in the transaction.

The payment schedule of an assignment is dependent on whether there is a profit or not. If the seller is making a profit or breaking even, then the buyers are expected to refund the full deposit paid-to-date by the sellers. In many cases, that is 20% of the original purchase price. If the seller is losing money on the assignment, then the buyers will bring a deposit for less than the deposits already paid to the seller. The deposit is due upon acceptance of the offer.

If there is profit, the assignee and assignor will negotiate when that profit is paid out. Remember when we mentioned the three important dates? the assignment closing, the interim occupancy date, and the final closing date? well, when it comes to negotiating when to pay the assignor their profit, we usually pick one of these dates to pay out the assignor’s profit.

The expected final closing is an important consideration for buyers when negotiating when to pay the assignor’s profit. The longer the final closing date, the more risk for the buyer. The reason? there is always a small risk the condo developer cancels the project. If a condo developer cancels the project, the buyers are returned their deposits paid-to-date. However, if a buyer has paid an assignor $100,000 in profit, that money is gone. So if there is a long closing, expect buyers to protect their final deposits by delaying it till interim occupancy, or final closing.

Conditions In Assignment Sales

After finding a buyer, the first hurdle to overcome is negotiating a fair deal. Once both parties are satisfied with the terms of the contract, we make the deal conditional on the lawyer’s review. This gives both the buyer and seller a chance to have the assignment contract, as well as the original purchase agreement, reviewed by a lawyer. Once both parties have spoken to their lawyers and are happy to continue, we put the deal to the developer to approve the new buyer. This condition usually lasts around 30 days. If the developer does not approve the new buyer within 30 days, the deal will become null and void, unless the buyer and seller both agree to extend that condition.

Once the developer accepts the buyer, the assignment will happen within a few days. Most contracts outline an assignment closing within 5 business days after the developer gives their consent. Some buyers will also include financing conditions in their assignment offer, so they have time to run the deal past their mortgage broker. However, most assignments are purchased with only lawyer review and developer consent conditions.

Here’s an example of selling an assignment for profit vs selling an assignment for a loss:

Below are four examples of the deposit/profit payment schedule for assignments.

Example 1 is a fantastic example of a preconstruction condo that appreciated $100,000. In this typical example, the assignee and assignor agreed to a deposit big enough to return all of the assignor’s deposits, as well as some extra profit to cover Realtor commissions. This deposit is usually transferred to the listing brokerage within 1 day of the offer being accepted and is released to the assignor on assignment closing. In this example, the assignor and assignee also agreed to pay the seller the rest of their profit at the final closing.

Example 2 shows the same conditions for the sale, except the assignee agreed to pay the assignor their full deposit and all their profit on the assignment closing date, instead of the final closing date.

Example 3 looks at an assignment where the assignor is taking a $100,000 loss. Instead of being paid their whole deposit on assignment closing, they are paid their deposit minus the difference between the purchase price and the sale price.

Example 4 is a rare case, where the market has turned significantly and the assignor is looking to transfer their assignment for $0. This means the assignor is walking away from all their deposits and will take no money to transfer their contract to the assignee.

What Does It Cost To Sell An Assignment condo:

The major fees when selling an assignment include the builder’s assignment fee, real estate commissions, and tax on the profit. Builder’s assignment fees usually range from $1500-$25,000 (in some extreme cases they go as high as $80,000). The assignor usually pays both the assignor and the assignee’s realtor commissions. The commission is something to negotiate with your agent. The total commission is usually 5% or less of the final sale price. There are likely taxes such as income tax, capital gains tax, or HST on the sale as well. Speak to your accountant about taxes due on the assignment sale.

Taxes due on an assignment sale:

The taxes on assignments are simple, however, buyers and sellers often confuse the HST taxes. That’s because there are two different HST taxes when talking about preconstruction assignments. Let’s clarify this! All new homes are subject to HST, however, end-users don’t notice the HST tax because the builder pays it and claims a $24,000 rebate on the end-user’s behalf. Alternatively, investors who purchase a pre-construction home are charged around $24,000 in HST, and are then able to claim a rebate for the HST they paid, if they rent the property out for one year. There are situations where an assignment will lose its eligibility for the HST rebate. If someone has lived in the home during interim occupancy, it will no longer be eligible for the end-user HST rebate.

The second HST tax we discuss when selling an assignment is the HST due on the profit. In many cases, the profit is subject to a 13% HST tax. In some cases, even the return of deposits is subject to HST.

The third tax is the income or capital gains tax on the profit. Any real estate property that is not your primary residence, as well as any business venture, is taxable as either a capital gain or as income. It’s really important to speak to an accountant before selling your assignment. Only an accountant can advise you whether you owe HST, capital taxes, or income taxes on your assignment sale.

Is it better to sell an assignment or wait till the condo is ready?

The pros to assigning a condo:

• Receive your deposits and profit sooner
• Avoid market risks. Savvy investors might look to assign their property if they sense the market might depreciate in the coming months/years.
• Avoid paying closing costs (land transfer taxes, development levies, utility hookups, and more). These usually come to a little more than 5.5% of the purchase price
• No mortgage or financing required
• Minimize holding costs (if you sell before interim occupancy or before final closing, there are no property taxes, maintenance fees, utility fees, insurance, mortgage, etc)

Cons to assigning a condo

• Developer restrictions (limiting the marketing of the property, limiting when they are accepting assignments)
• Market perception and buyer’s hesitancy when buying a property sight-unseen
• Market fluctuations suppressing buyer demand
• Limited buyer pool and most of the buyers are investors who want a good deal
• Usually sell for a lower price than comparable resale properties
• Financing challenges for the buyer if the property does not appraise at the new purchase price
• Potentially more taxes compared to closing and reselling

The most common mistakes when selling an assignment:

Hiring the wrong representation, or not relying on professional advice:.

As active realtors in the assignment market, we come across quite a few mistakes. But most of them could be avoided if the buyers and sellers were represented by experienced realtors and lawyers. The agreement of purchase and sale for an assignment is very different compared to an agreement of purchase and sale for a resale home. One of the most common mistakes we see from buyers and sellers is assuming the paperwork their realtors drafted is correct, and forgoeing their right to have their lawyer review the assignment paperwork.

Poor communication/understanding:

This happened to my assignment buyers recently. They purchased a home where the seller’s representative told us the finishes had not been chosen yet. We protected our buyers by including clauses to that degree. However, a few days after the assignment closing, we learned the sellers chose the finishes a few days before closing. Luckily, the developer allowed the buyer to make changes to the finishes at an additional fee.

Ignoring deadlines or dragging your feet:

Assignments come with a lot of moving deadlines, and there are a lot more parties involved compared to a resale property. Always return paperwork and signatures as soon as possible. Compared to a resale property where the only parties are the buyer, seller, and their agents and lawyers, an assignment involves the developer, the developer’s lawyers, the buyer and seller agents, and the buyer and seller lawyers. If everyone took 3 days to return paperwork, the conditional period would lapse and the deal would become null and void.

Incomplete Buyer Vetting:

Buying an assignment requires the assignee to have their mortgage preapproval, as well as their purchase funds available very shortly. If the assignee does not have a mortgage preapproval on hand, it could delay the developer accepting the assignment. If they do not have their funds available it could delay the quick closing as well.

It’s important to thoroughly vet buyers because some builders require the assignor to close in the rare chance the assignee cannot close.

Misunderstanding fees:

Builder’s contracts are not standard forms, and their deposit structures and closing fees can vary from site to site. There are a lot of potential fees when buying and selling assignments and they include, but are not limited to: deposits, seller’s profits, upgrades, lawyer’s fees, interim occupancy rent, utility set-up fees, development levies, realtor commissions, accountant fees, HST, and income taxes. These fees can vary from deal to deal, and when they are payable is different in every assignment. For example, some developers require the homeowner to pay for upgrades when they are chosen, and others charge for the upgrades at final closing.

If you have a preconstruction condo or home that you are thinking of assigning. Feel free to reach out to us for some advice and insight.

Related posts.

6 important facts to consider when selling a preconstruction condo.

Everything you need to know to sell your preconstruction condo assignment

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Rashid Notash, Broker

416-500-5360 | [email protected]

The Condo Assignment Process: Everything You Should Know

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September 15, 2018 | Selling

Condo assignment sales are different from typical pre-construction transactions. Whether you’re on the buyer or seller side, the condo assignment process is unique—which is why you should take the time to learn about the costs, timelines, and other specifics involved.

If you’re thinking about buying or selling a condo on assignment, here’s what you should know…

What is a condo assignment sale.

An assignment sale occurs when a pre-construction condo buyer decides to sell before closing. Since they don’t technically own their unit (which may not be completed yet), what they’re really selling is their purchase agreement with the builder.

The concept sounds simple. However, there are some ins and outs that both sellers and buyers should know to ensure that their transaction is legally above board—and in their best interests.

Seller FAQs

Thinking of selling your pre-construction condo on assignment? Here are some answers to the most commonly asked questions sellers have about the process.

Should I sell my condo on assignment?

Pre-construction buyers often sell condos on assignment as part of an investment strategy. That said, there are other instances where going this route makes sense.

Maybe your lifestyle has changed, and the unit you were excited about a year ago is no longer ideal. Perhaps you’re facing some financial challenges, and you need some cash in the short term. Whatever your circumstances, a real estate agent with condo expertise can help you decide if selling on assignment is right for you.

What are the tax implications of selling on assignment?

While there’s nothing wrong with assignment sales, some Canadian investors have gotten themselves in hot water for making them without paying taxes on their profits. Regulators have been cracking down on these transactions, which is why knowing your taxation responsibilities is crucial.

The bottom line? If you’re making an assignment sale, it’s best to speak with a financial expert before moving forward.

Does the builder need to be involved?

Your Agreement of Purchase and Sale will specify whether selling your condo on assignment is permitted. Either way, you should obtain consent beforehand. There’s a very good chance that builder approval of an assignment sale is a condition in your contract—so read it carefully.

How much will it cost to sell on assignment?

If the builder signs off on your sale, you’ll probably still have to pay a fee. This sum could range from a few hundred dollars to several thousand, and in some instances it is waived by the developer. You should also be aware that, along with the regular costs associated with selling, your legal fees may be higher than they would be for a simpler transaction.

Will I get my deposit back?

A purchaser who is buying on assignment (also known as an “assignee”) usually pays the assignor their full deposit. As part of a typical deal, you should receive the amount you’ve paid to date, sometimes along with your profit, on closing day.

How can I find a buyer?

Be aware that there are marketing restrictions placed on most assignment sales. While it depends on the terms of your agreement with the builder, you probably won’t be able to post on the MLS or online.

If you market your assignment in violation of your contract, the builder may be able to cancel your agreement—and hold onto your deposit. For this reason, working with an agent who knows the local condo market is your best bet for finding a buyer.

Are you thinking of purchasing a pre-construction condo on assignment? Read answers to some of the most common questions buyers have first.

When is buying a condo on assignment a good idea?

If you’re excited about a particular condo development that has no remaining inventory, buying on assignment could be your way into the building. In many cases, the price for a unit is lower when it’s sold this way than it would be if it were on the market as a resale unit.

On the flip side, assignment sales tend to be more complicated than traditional condo transactions. They often entail costs, risks, and legal minutiae that aren’t part of conventional resale and pre-construction purchases.

An agent with condo market expertise can help you weigh the pros and cons of including assignment sales in your condo search.

Can I renegotiate the terms of the agreement in place?

No. When you buy a condo on assignment, you’ll be expected to fulfill the terms and conditions that the original buyer agreed to (and take on any potential risks associated with them). For this reason, it’s very important that you protect your interests by working with an experienced real estate lawyer.

Fortunately, you may be able to negotiate with the seller (or “assignor”) regarding the specifics of your purchase with them. Assignors are often in the midst of a life transition, and they may be eager to make a deal and move on.

Which costs will I pay?

Along with the sum you’ve agreed to, you will almost certainly be expected to pay the assignor the amount they’ve put towards their deposit to date. Unless your contract specifies otherwise, you will be responsible for final closing costs including (but not limited to) land transfer taxes, development fees, Tarion fees, and HST if applicable.

As part of the assignor’s original agreement, development charges may be capped. If this is the case, you could wind up spending significantly less money—so it’s worth looking into.

How will closing work?

Closing on an assignment sale can be complicated for the assignee. You’ll have to go through the process twice: once when your deal is finalized with the assignor, and again when you close with the builder. During the first closing, you’ll pay the assignor their deposit and sometimes the profit. The profit portion could be renegotiated and paid on the second closing. During the second, you’ll pay the developer the remainder of what’s owed.

Don’t forget about the occupancy period! Once your unit is fit to be occupied, you will pay a sum that’s approximately equal to your monthly mortgage payments and condo fees until the building is registered.

What else should I know?

In addition to understanding the assignment process, you should be aware of the pros and cons that go along with buying a pre-construction condo. Your purchase will come with certain risks that the original buyer was willing to take on—such as delays to closing. On the flip side, there’s nothing quite like moving into a beautiful, brand new condo.

When handled correctly, condo assignment sales can be beneficial to buyers, sellers, and developers. Just remember that understanding the process is the key to success—which is why working with the right real estate and legal professionals is so important!

Interested in buying or selling a pre-construction condo? Let’s discuss it! Call or shoot me a text at 416-500-5360, or email me at [email protected].

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What You Need to Know About Condo Assignment Selling and Buying

By Condo Culture

9 Primary Steps Involved in Selling a Condo Assignment

• Review the Terms of Your Agreement of Purchase and Sale
• Get Approval From the Builder to Ensure Your Unit Can Be Assigned
• List Your Assignment For Sale (Advertising on MLS is typically prohibited by the Developer)
• Have Your REALTOR® Field Buyer Offers and Negotiate the Best Deal Possible
• A First Deposit Is Collected and Held In Trust By Your Real Estate Brokerage or Lawyer
• Work Through the Conditions Of An Offer With Your Selling Team
• Builder Approval Needed From the Purchaser On Proof Of Financing
• A Second Deposit Is Collected - Typically the original 15% to 20% Deposit
• Remaining Money Is Received Once the Unit Closes - the Difference Between Your Original Purchase Price and the Assignment Sale Price

There are all sorts of intricacies with condo assignment sales and purchases, so it’s important to first connect to a brokerage and REALTOR® with lots of assignment transaction experience under their belt.

We have helped hundreds of clients with their assignment buying and selling needs, and our client’s excitement and enthusiasm when a transaction is completed is incredibly rewarding! We are the area’s premier condo selling and buying team and walk hand-in-hand throughout the entire assignment process with our clients. We have a few exciting condo assignment listings available right now at Station Park and Garment Street Condo, each one includes a detailed floor plan so you can understand what the final product will look like. If one or more of those assignments interest you, be sure to click on the “TALK TO A CONDO CULTURE EXPERT” button and provide your information so one of our specialists can reach out to you.

Before getting into the nitty-gritty details of condo assignments, let’s first touch on the basics of them, so you have a sound understanding of the terms and how they work.

Outlining What a Condo Assignment Sale Is

In its purest form, a condo assignment is a unit that was originally purchased by a buyer during the pre-construction phase and that buyer wants to sell it prior to the building’s construction being completed, before an occupancy date reached and the building has been officially registered. The original buyer may want to sell the condo due to changing financial circumstances, he or she originally intended to move into the unit but plans have changed, it’s an investor who has too many units and wants to sell one off, or for a variety of other reasons.

Each condo developer handles assignment options differently, and some don’t allow them at all, so it’s important that if you’re buying a pre-construction unit, you understand the circumstances around them in case you need or want to sell prior to the completion date.

When a pre-construction is first purchased by a buyer, an Agreement of Purchase and Sale (APS) is drafted which outlines the purchaser’s legal rights and obligations. The person who is selling a condo assignment is named the assignor and the buyer is designated to be the assignee. An assignment clause is typically included in the APS and the fee is usually in the $5K to $15K range, but every developer has its own fee and terms.

How An Assignment Deal Gets Finalized

A conditional offer and agreement between the assignor and assignee becomes legally binding once the first deposit is made by the assignee, and that amount is negotiable. The assignee has 10 days after making the first deposit to have his or her lawyer review all original documentation to ensure everything looks solid. One common clause to be aware of is unit upgrades and unpaid unit upgrades, so there are no financial surprises as the condo moves through its construction process. The assignee is typically responsible for any outstanding costs including unpaid upgrade expenses, but like most aspects of assignment deals, everything is negotiable. Once the lawyer review is completed and deal conditions have been met, the next deposit by the assignee is required - typically 15% to 20% of the sale price or whatever the assignor originally paid as a deposit. Once the developer approves the transaction or when the assignee receives a mortgage once the building has been registered and occupancy begins, then the difference in price between the pre-construction price and assignment sale price will be paid to the assignor. The assignee is also responsible for the typical real estate closing costs at this point including Tarion warranty enrolment fees .

Benefits for Assignors

Most notably, the seller of an assignment is often making some sort of a profit - how much that ends up being varies depending on current market conditions, how far along the development is, what the assignment fee was, HST and tax implications, and other factors.

The next benefit is that there are no closing costs because the sale is happening before the building has wrapped up construction, so no mortgage is involved and closing costs are non-existent.

Once the assignment is sold and the APS belongs to the new owner, the assignor receives money as outlined above and can use it as he or she pleases for real estate or otherwise. Want to sell your condo assignment? Be sure to connect with us to leverage our deep experience with selling assignments as we have thousands of active buyers engaged on the region's top condo specific search site: CondoCulture.ca, do email marketing to thousands of subscribers through our One List and weekly newsletter , promote listings on our social media accounts, feature listings in our Uptown Waterloo store windows, plus so much more to ensure the success of our condo assignment sellers.

Benefits for Assignees

A big benefit to buying a condo assignment is that you can get access to a development that’s likely already sold out. Station Park is one example - the first two towers sold out extremely quickly in 2019, but we have sold dozens of assignments in Tower 1 and Tower 2 to buyers who couldn’t get their hands on a unit initially, but got their opportunity through an assignment.

With the condo resale market white-hot and multiple offers on almost every listing, assignments provide a fantastic buying opportunity as there’s often less competition for this type of real estate purchase. Assignments typically can’t be listed on traditional marketing channels such as MLS so you tend to see that fewer potential buyers are aware of them. This means that Assignment Units can often be purchased for their list price or at least in that general range. At any given time, Condo Culture has a number of off-market, exclusive listings that cannot be found on MLS, Realtor.ca, or coming soon listings. Bottom line - working with our team of REALTORS® gives you an unfair advantage for tapping into these exclusive listings as they first become available.

There can also be some outstanding value buying opportunities if assignors need some capital relatively quickly and are extra motivated to sell fast. There might be some room to negotiate on the list price and a unit can even potentially be purchased below the current estimated market value. This sort of scenario is especially attractive if the occupancy date is just a few months away and the asset can be used to live in or lease out in the not too distant future. Be sure to leverage our condo assignment buying experience - we have literally sold dozens of them over the past few months, and hundreds throughout our company’s history.

Assignments and HST

The assignor will need to pay HST on the profit that he or she makes on a condo in addition to the deposit money that gets returned - on average, roughly 78% of those amounts are taxable, but each and every assignment deal is unique and should be supported by experienced professionals including lawyers and accountants.

Real estate is often a numbers game, and what we are increasingly seeing is the list price being adjusted to essentially bake in the HST expense that will need to be paid. So if an assignor wants to clear $x from the sale, our experts are calculating the estimated HST that will need to be paid and adding it in. Every assignment sale and situation is unique, and that’s where our team’s specialized expertise comes in handy, so an assignor won’t be surprised when it comes time to pay the government their fair share. However, we strongly recommend working with professional accountants who have significant assignment deal experience - we can provide you with a shortlist of our favourites should you decide to list yours for sale through Condo Culture. We can almost always provide a breakdown of financial insights to our clients, but again, we strongly encourage working with a professional accountant who is well versed in assignment transactions to receive the most accurate numbers.

End-users who are looking to buy assignments can potentially get a break when it comes to paying the HST, but as we outline below, every deal is different, assignment laws are evolving, and it’s so important to have an experienced accountant and lawyer on your team to know what potential options are at your disposal.

Top Legal Considerations and Clauses For Assignment Deals

Every assignment deal is different and unique in its own right, so it’s vitally important to hire a lawyer who has extensive experience with these types of transactions. Laws regarding assignments may change over time, so again, a lawyer who has this specific expertise will be key to your assignment selling and buying success. Our team has worked with several lawyers to help bring assignment deals to the finish line, and we are more than happy to make recommendations when the time comes for legal representation.

A big part of each assignment deal is that the deal isn’t officially completed until the project’s developer has given formal approval in writing, and during this time, the seller has the ability to cancel the sale if he or she decides to (this is a very rare occurrence). One of the most common reasons for this happening is the condo’s value is increasing rapidly and the seller may feel that he or she can get a better deal elsewhere to realize a larger profit. No profit is made on an assignment sale until the building is registered, and the deal officially closes. The assignor will get the first deposit and his or her 15% to 20% deposit back, but won’t get the additional money until the building’s registration event takes place. Legal terms such as these mentioned here are typical assignment deal standards, but each agreement certainly has its own, and your lawyer will need to go through every clause and sentence with a fine-tooth comb.

In most cases, MLS / Realtor.ca can’t be legally utilized for assignment listings (unlike resale properties), so the buyer has to come from elsewhere. Again, that’s why Condo Culture is incredibly valuable when it comes to assignments since we have a large buyer database to pull from and the region's most active condo search site, along with many different marketing channels to ensure our sellers can connect with quality buyers to maximize the final sale price.

You need a complete team between a real estate professional, lawyer, and accountant to support you whether you’re selling or buying an assignment. This type of real estate product is much different from a resale property as you’re essentially buying and owning an agreement until the condo is registered and reaches its occupancy date.

We have created resources on this important topic in the past, we outlined the benefits of condo assignments and provided information on what they are and how to manage the assets, and also how to assign a pre-construction condo .

We are the area’s condo assignment expert, so if you’re looking to sell or buy one of these units, be sure to reach out to us so we can explore potential options with your exciting goals at the forefront of it all. Also, feel free to stop by our Waterloo office (pictured above) right below Bauer Lofts at 191 King Street South in Waterloo for a conversation, our team would love to speak to you about any of your condo goals.

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Condo Assignment - A Guide for Buyers & Sellers

What are assignments all about?

As a purchaser, you will usually wait a couple of years after signing an Agreement of Purchase and Sale (APS) for a condo in the pre-construction phase before actually moving in and taking possession of the unit. Typically, a realtor that specializes in pre-construction will ensure that an ‘assignment clause’ is drafted into your contract, giving you various options closer to the completion date. Why? Your situation may change – nobody knows what will happen between the time you sign the contract and when the building is ready for occupancy. Life happens. The assignment clause allows the original purchaser(s) to sell (assign) the Agreement of Purchase and Sale (contract) and all of its legal rights to a potential buyer. In the assignment world, selling is called assigning, the buyer is the assignee and the seller is the assignor. Assignments can get a little overwhelming for both assignees and assignors, but with the right lawyer/realtor combo, the transaction is a breeze. Let’s dive a little deeper into how you can assign your newly purchased condo unit below.

Who can assign?

Only the purchasers who’s names are listed on the original APS and have a legally valid assignment clause drafted into the agreement have the right to assign their suite. Unfortunately, those purchasers who did not request that the right to assign be written into the agreement at the time of purchase will not be able to get the builder’s approval to assign. Often times, builder consent must be granted before you are able to begin advertising your assignment sale. In order to obtain consent, the developer may have certain criteria that has to be met:

• a percentage of the building has to be sold firm (typically 80% plus) - at this point, the builder has most likely received their construction financing and you are not competing with the sales of their remaining inventory;
• a predefined portion of your deposits must have cleared (for example 3/4 (15%) of an agreed 20% deposit) - we have also seen builders request that any remaining deposits be paid in full and some even ask for futher deposits;
• the builder’s lawyer must grant you approval;

The criteria may vary per developer, but the above is what you should generally expect if you plan on assigning your unit. Make sure that you are aware of your rights and obligations, before committing to an agreement.

How do you assign?

Once you are ready and the builder gives you the go ahead, you can begin advertising your unit. Keep in mind that builders usually do not permit listing the suite on MLS since as a pre-construction purchaser, you do not have title to the unit until final closing. Also, a lot of MLS boards do not allow a property to be listed on the service if the property cannot be physically shown. The best way to gain the most exposure for your listing as an assignor is to contact a realtor who specializes in pre-construction condos. Pre-construction experts have access to different Realtor networks that focus on marketing exclusive "off-market" properties, such as assignments. At inCondo, we also have a dedicated section for our assignment listings . Most developments sell out of inventory quickly upon launch and a lot of buyers are not willing to wait a couple of years to take possession of their investment. These two factors set the stage for the condominium assignment market. Pre-construction professionals have a database of buyers who prefer to purchase a brand-new, never-lived-in unit and since there is most likely no remaining inventory available from the builder, they take to assignment sales.

What are the costs associated with assigning?

The fees associated with assigning your unit vary per developer and can depend on the incentives available at the time of signing the original APS. Builders may charge a fee if you decide to assign your unit – anywhere from free to $5,000+, in order to cover lawyer and administration fees on their end. The assignment transaction between assignor and assignee is separate from the original transaction with the developer. A commission should be paid to the Realtor that brings a client (assignee) and your listing Realtor will charge a marketing fee as well. Commissions are always negotiable. The only recommendation we can make here is to use the services of an agent that understands condo assignments and deals with pre-construction condos. Another fee you will encounter is your lawyer fee. Although assignments are increasing in popularity, most real estate lawyers do not work on assignments and it can be tricky to find an expert. David Feld & Sonia Kalia’s office ( wearelaw.ca ) is an excellent resource for legal assistance with regards to your assignment sale. When you find an assignee and accept an offer, or vice versa, always have your Assignment Agreement of Purchase and Sale reviewed by a lawyer to avoid complications upon closing and title transfer. Fees typically range from $2,000 - $2,500 since there are more contractual elements to inspect (including the original APS) compared to re-sale.

What should I expect while looking for an assignment?

As the assignee in an assignment sale transaction, we highly recommend that you fully read through the original APS with your lawyer to ensure a smooth transfer process. Keep in mind that you will be bound to the terms and conditions set out in the original contract – all of the risks, but also the rewards are passed on. Some of the liabilities include paying HST upon closing (unless you purchase for personal use), disbursing Land Transfer Tax (though first-time home buyers qualify for a rebate), providing the assignor with their deposits paid to date (potentially profits vs. original purchase price as well), and development/educational levy costs (these may be capped in the assignors original APS). You would usually encounter these same liabilities if you were to purchase the unit at the pre-construction phase years prior regardless, but at the assignment stage, there is little to no room for negotiation – all of the original contractual obligations transfer to the assignee. However, there are plenty benefits to purchasing an assignment sale, which include: selecting colours, upgrades and finishes (an assignee would have this opportunity if the purchase occurs approximately 1 year prior to construction completion), enrollment in the Tarion Warranty Program (legislated by the provincial government to protect the buyers of new construction), as well as access to brand new units located in the most desired areas and not available on the re-sale market, while eliminating the threat of other contesting buyers.

Overall, assignment sales are extremely intricate transactions which require your Realtor and lawyer to carry the utmost professionalism and expertise but can be very lucrative for both assignees and assignors. If you are currently searching for an assignment, would like to explore assignment opportunities, or have any questions, we are always happy to help!

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Really liked how you explained it all. Very well-articulated!

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Assignment Sale 101

BY Reilly Beesley/July 5, 2022

The condo industry is booming, with that has come a spike in the preconstruction industry, and an increase in assignment sales. If you’ve been looking around at the condo market recently there is a very good chance that you’ve come across the term ‘assignment clause’ or ‘assignment sale’.  

Whether you’re considering opting for an assignment sale, or you’re just looking to get a better handle on what it actually is, we’ve got you covered.   

Below we will break down what an ‘assignment’ is, why someone may want to sell or purchase through an assignment sale, HST changes on assignment sales, and if this is the right option for you.  

What is an assignment sale?

First things first, what exactly is an assignment clause or sale?  

The basics of an assignment sale is the transfer of contractual rights from one party to another. The original buyer of the property (the assignor) gives away the rights and obligations of the property to a new buyer (the assignee). In this transaction the assignee agrees to meet all of the assignor’s commitments and obligations under the original contract of purchase. The assignee is not buying the property outright, but rather buying the “rights” to obtain the condo from a third party, the developer. This all takes place before the property closes.  

While an assignment sale is possible for all types of properties, you will mostly see this type of transaction with pre-construction condominiums.  

This clause will be indicated in the original sale of purchase. Each build is different, making each assignment unique. Unlike traditional real estate transactions, in assignment sales the builder plays a large role and can actually deny or set varying restrictions on selling assignment.  

Why would someone want to do an assignment sale?

There are several reasons why someone may choose to do an assignment sale, with the most popular two being lifestyle change and investment opportunities.  

Lifestyle Change

• Preconstruction condos can be purchased up to several years before the build is even complete. The more time between purchase and occupancy, the greater the potential for various circumstances to arise and different needs to be met. It is not uncommon to see assignment sales due to the original owner’s lifestyle and needs changing.  

Investment Opportunity

• You may also hear about people who “flip” condos. Getting a condo from an assignment sale is one way people do this.  

Why would I want to buy an assignment sale?  

Just like there are several reasons why someone might sell on assignment, there are also several reasons why one might opt for an assignment sale over a typical transaction.  

Purchase condo at lower cost  

• There is typically less competition for these types of properties which translates into a better deal for the buyer.  

Buyers Advantage

• If someone is looking to get out of their contract quickly, it leaves the buyer at an advantage to have more choice in the build while it is still being completed.

• If you purchase a pre-construction condo on assignment there is a larger opportunity for you to build equity on the condo. Any equity that was and will continue to accumulate on the build will now inherently be transferred over.  

Things to Consider if buying on Assignment

While an assignment sale can be mutually beneficial to both the seller and the buyer, just like any sale transaction, there are several things to consider when buying on assignment.

Non-negotiable contract

• When you purchase the contract and rights to the property, you are purchasing as is. You are inheriting a contract and the original terms must be adhered to. As the new buyer you would essentially just be stepping into the shoes of the original owner.  

Closing Costs

• Once complete and the building is registered, you will be responsible for all closing costs. This includes, but is not limited to, development charges, Land transfer Tax, connection fees, HST, and legal fees.

Conditional Period

• Once both parties have agreed upon the sale it then must be submitted to the developer who has the final approval. Making this a weighty and potentially longer period than a regular transaction.  

HST Rebate changes in Ontario

Ontario recently announced in its 2022 budget how HST will be applied to assignment sales on preconstruction condos, homes, and townhouses moving forward.  

Previously to this announcement assignment sales in Ontario only required the new buyer (assignee) to pay HST on the profits made on the transaction. This new rebate announcement means that any assignment sale closing after May 7 th , 2022, is subject to the new buyer (assignee) paying the 13% HST on the entire purchase of the property.  

If considering an assignment sale, it is important to take this new HST change into account.

While not your typical sale or transaction, assignment sales are definitely an option to consider. Interested in learning more about assignment sales? Curious if this is the right move for you? Connect with an agent to find the best option for you!  

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What you need to know about buying an assignment condo

An assignment sale isn’t a typical real estate transaction and there are many important factors you need to know before buying an assignment condo. Regardless of the market conditions, assignment condos are usually difficult to sell, in part because they have much higher upfront requirements than regular sales. For the same reason, it presents a great opportunity for a buyer to purchase without facing overwhelming competition. Below is what you need to know about buying an assignment condo.

What is an assignment sale?

An assignment sale is a transaction in which a buyer (the “Assignor”) has purchased a property and then sells their interest in that property to another buyer (the “Assignee”) prior to the property closing. Essentially, the Assignor is not actually selling the property; they are selling their contract along with the rights and obligations of the original agreement with the Builder or original seller. While it is possible to have an assignment sale of a pre-construction house or a resale property, assignment sales in Toronto are most common in pre-construction condos.

The assignor is the original buyer of the condo unit in the pre-construction phase. In an assignment sale, the assignor is the seller.

The assignee is the buyer of the assignment condo and takes over all rights and responsibilities of the original contract.

Cons of buying an assignment condo

• You, as the buyer (assignee), require a substantial amount of cash in order to buy an assignment condo. Typically in the range of 30% to 40% of the purchase price, see the cost breakdown below for details.
• You may be approved for a mortgage when you make the purchase of an assignment condo, but the transaction closes much later. While you can occupy your unit prior to the final closing in the interim occupancy phase, you only get your final mortgage approval at the final closing. The interim occupancy phase may last for many months and requires you to pay the interim occupancy fee ( Tarion provides a great explanation on interim occupancy ). If your financial circumstances change in this period you could have a hard time getting a mortgage.
• Usually, there is only one assignment sale permitted. So you cannot resell the condo until the final closing and registration of the building.

Pros of buying an assignment condo

• You can buy a brand-new condo without having to wait many years for it to complete.
• There is usually a good amount of inventory to choose from and you can get a better price than comparable resale properties. This is especially important if the market is super hot, as there is less competition.
• You don’t have to worry about a project being canceled, leaving you out to dry. Once assignments are allowed by the builder, the building is usually already well underway.

Looking to buy an assignment condo?

Get in touch for a free NO OBLIGATION consultation and see why others have put their trust in me . Don’t like forms? Call or text me at 647-830-5210 or email me at [email protected].

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Costs Breakdown

Payment terms vary from one agreement to the next but the chart below will give you some insight.

Assignments and renting

If you are buying an assignment condo in order to rent it out be sure to mention that to your lawyer. The builder’s contract may have very specific conditions concerning when and if you can rent the unit out during the interim occupancy period. Also, the builder may not qualify for a portion of the HST rebate if you’re an investor. However, subject to certain limitations the assignee may qualify for an HST rebate after closing. To get exact details on this I would strongly recommend speaking to a lawyer and an accountant before you start searching for assignment condos.

All assignment sales should be conditional upon your lawyer reviewing the entire assignment agreement. Part of that will be all of the contents and disclosures of the original agreement of purchase and sale between the Assignor and the builder.

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Don’t like filling out forms? Feel free to call, text, or email me. My cell phone number is 647-830-5210 and my email is [email protected]

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GTA-Homes » Real Estate Info » Assignments

• Assignments

An Assignment Sale in the Pre-Construction Market

Simply put, an assignment sale is the sale - or an "assignment" of a contract to purchase a pre-construction condominium suite. An assignment sale is usually applied to the pre-construction condominium that has not been registered yet, so no one can take ownership of the unit itself. Only the contract can be sold.

When you purchase a pre-construction condominium unit, you will be given an assignment clause/right in the form of a contract. You can choose to sell your assignment before the condominium is even built.

• Assignee/Buyer is not buying a property from Assignor – Assignee is buying the “right” to acquire property from a 3rd party (usually a builder)
• Assignor assigns its interest and rights in the Original Agreement with the Builder (or original seller)
• Assignor assigns to the Assignee its interest in the original “deposit”
• Assignee “assumes” and agrees to perform all of the Assignor’s obligations under the Original Agreement

Once the building has been constructed and registered by the city, the ownership will be transferred to the buyer. Until then, it’s just the sale of a contract, but as you will see, there are many advantages to these kinds of sales for both the buyer and seller.

In this article, you will learn more about assignment sales, why they are used, the process of this transaction and how it can be transferred.

This way, you will be able to determine if an assignment sale is right for you. We at GTA-Homes strive to provide our clients with the knowledge of the pre-construction market, so that they can make a more informed choice when it comes to investing in their future.

An assignment sale can be mutually beneficial for both the buyer and the seller.

See all assignment listings, what you'll learn....

• What Is an Assignment Sale?

An Example of an Assignment Sale

• Buying an Assignment

Selling an Assignment

Assignments faq.

The Details of an Assignment Sale

What Is an Assignment Sale? Why Do These Kinds of Sales Happen?

There are many reasons why someone might want to sell the rights to their unit before it’s been built. For example, someone may have bought a suite that’s three years away from being completed, but recently had to relocate for a job. This buyer may need to sell their agreement to afford a property in their new city. Another common reason is that a buyer began the purchase process when they were single but during the pre-construction process they married or are now expecting a child. Suddenly they’ve discovered that the pre-construction one-bedroom suite they bought is not big enough for a growing family.

The “ assignment clause ” in the purchase agreement comes in handy when these things happen. It allows the original buyer to pass the contract onto somebody else without accruing financial penalties.

These types of transactions are common and fully legal, but whether you are the buyer or the seller, it’s important to work with both an experienced realtor and lawyer who know how to protect your interests.

These deals are more complex than a conventional resale and involve three parties: the developer, the assignor and the assignee. It’s a two-stage process that involves both interim occupancy and the final closing.

This is just the basics of an assignment deal. There are more details regarding mortgage rules, and other contract details. Keep reading to learn more! Or you can always reach out to talk with one of our agents. We love to talk condos! This is just a general overview, but each arrangement is unique with its own rules, terms, and conditions.

We advise everybody who is thinking of buying or selling a pre-construction assignment to seek advice from a real estate agent, lawyer and tax accountant. Contacting an agent is important because assignors may have to pay a fair amount of tax on any profits they received from the completed sale

Most builders allow assignment sales and you will often see these listings on REALTOR.ca. However, there are some rules in the original purchase agreement that must be followed. They are also more complicated than a regular sale because a mortgage cannot be obtained on the closing of the transaction, only once the building has been registered. Other issues such as occupancy, reimbursement of the seller’s deposits and more must be taken into account.

In 2017, John Smith buys a pre-construction condominium suite from ABC Developments for $400,000 with a total down payment of 20%, equalling $80,000. The project is set to be completed in 2022.

In 2021, John discovered he will be relocated to a new city. He can’t afford to buy a new home while holding onto his pre-construction condo.

Fortunately for John, the assignment clause allows him to sell the contract for his unit before the building is completed and registered!

John has decided to sell the contract to his unit to Jane Doe. Due to the changes in the market, he was able to sell the contract for $500,000.

Assignment Purchase:

• Assignment Agreement: $500,000
• Original Purchaser (Assignor) = John Smith
• New Purchaser (Assignee) = Jane Doe
• Vendor (Builder) = ABC Developments

Assignment Purchase Price by John Smith to Jane Doe = $180,000, due immediately. This includes a deposit of $80,000 + profit $100,000. The amount and timeframe for this payment can also be negotiated.

• In 2022 when the building is complete and ready for interim occupancy, Jane Doe will move into the unit during the occupancy period. At this point she will begin paying occupancy fees to the developer. These fees take the place of mortgage payments and condo fees until the building can be registered.
• Interim occupancy happens when the city has designated the property as safe to live in. The building will be officially registered once the municipality does a final inspection. Jane Doe can occupy her suite in the meantime until the building is officially registered.

Assignment Details:

• When the building is officially registered by the city, the official title transfer takes place between the developer and the new purchaser. Jane Doe can finally register a mortgage and start paying her mortgage payments and condominium fees.
• Funds required to complete the sale by Jane Doe to the builder = $320,000
• Jane Doe now has all the rights to the property, just like any homeowner. Any future re-sale of the property will consist of a regular real estate transaction.

Is It Worth It to Buy an Assignment?

Assignment purchases can actually give you some of the best deals in the GTA condo market because fewer people typically seek out these types of sales. In addition to fewer buyers, many real estate agents aren’t familiar with the structure of an assignment sale and often won’t bother to advertise these listings. Even lawyers may not know the ins and outs of an assignment sale.

The high demand in the resale market can potentially force buyers into bidding wars, which can cause people to overpay for their suite. Buying a contract through assignment gives you the opportunity to avoid excessive competition and often means you pay much less than you would for a resale unit.

The assignment condo market can be mutually beneficial for both the buyer and the seller. The seller can list their unit without having to wait until the building is completed, and the buyer can save time and potentially thousands of dollars.

Another advantage to buying an assignment agreement is that you will get a brand-new unit that automatically comes with the seven-year Tarion Warranty Program. Let’s not forget that you’ll likely move into the unit sooner instead of waiting the usual 3 to 4 years for the building to be completed!

Let’s Recap Some of the Advantages for Buyers:

• Options: More choices when there’s a shortage of listings in the market.
• Less Competition: Fewer people look at these types of listings.
• Peace of Mind: Fewer people looking at these sales means there’s less of a chance for a bidding war. You can avoid bidding wars and paying more than you can afford just to outbid another buyer.
• You Become A VIP: You will likely inherit VIP incentives like the seven-year Tarion Warranty Program and other incentives from the builder such as credits, upgrades, capped developing charges and much more.
• More Choices: Depending on how far along construction is, you may still be able to select your own finishes, colors and upgrades.
• Negotiate: Sellers usually need to sell because they need to drop their equity. This can give you leverage for prices, deposits, and closing dates.
• Brand New Suite: You will get your unit much faster instead of waiting 2-3 years like in a typical pre-construction contract. Oftentimes the occupancy date is just a couple of months away.
• Taxes: You may also benefit from saving on taxes like GST and HST.

We love to chat about the assignment sale market, so don’t wait, give us a call and let’s find you a great deal.

Traditionally, owners who wanted to sell their pre-construction units had to wait months or years for the final closing date to officially put their suite up for sale. By this time, they could have already put significant funds into occupancy fees and closing costs.

Assignments sales is not a new strategy in Canada, but compared to other countries where condos have been around much longer, the process is not always well understood by sellers, buyers, agents, lawyers, and even lenders. Sellers who have been taking the time to learn about assignments have been reaping the rewards by saving time and maximizing their profits.

These transactions are becoming increasingly popular. Think of it as a sort of condo flipping. Sellers can transfer their property rights during or before interim occupancy and avoid paying hefty carrying and closing costs, which helps them get their deposits back.

Most builders allow assignment sales, although they often have certain rules that must be followed. Even with strict rules in place, however, there are options available for you.

Let’s Take a Look at the Advantages for Sellers:

• Insurance Policy: In the event that your situation changes and you no longer need your unit, you are able to sell your assignment and pull out your equity.
• No Carrying Costs: You can avoid paying monthly fees like occupancy fees that can sometimes last for up to two years.
• No Closing Costs: You don’t need to take out a mortgage or incur any other closing costs.

What is an Assignment Sale?

It is the sale of a contract to purchase a pre-construction unit. This means, instead of selling an already built unit, what’s being sold is the contract or right to acquire the property upon completion. The original purchaser (the "assignor") of a property sells their obligations under the original contract to a new purchaser (the "assignee").

The assignee will generally assume all of the assignor's duties and obligations, such as interest payments, taxes, and maintenance fees during interim occupancy. Upon completion, the assignee is granted the title to the real property and will incur all final closing costs.

Can any kind of purchase agreement involving a real estate transaction be assigned?

Under normal circumstances, any purchase agreement can be assigned, providing the agreement doesn’t prohibit it.

Is an Assignment legal?

It is legally permitted unless prohibited in writing in the original agreement of purchase and sale. In some cases, the developer may charge the assignor a fee for this kind of sale.

Is it necessary to get permission from the developer to assign the contract?

That depends. You need to consult your purchase agreement to get the specifics. Generally developers will not permit an assignment sale without their consent, which means you’ll need to consult with them and a legal representative. There have been incidents where an unauthorized assignment sale has resulted in the original agreement being terminated, and the deposit withheld!

Is there a standard legal form for these types of sales?

Yes, there are two: OREA Form 150 Assignment of Agreement of Purchase and Sale Condominium and OREA Form 145 Assignment of Agreement of Purchase and Sale (including applicable schedules.) In most cases, the developer will have their own form as well.

Will either the assignor or assignee’s lawyer services be adequate?

It is essential that the assignor and assignee each retain a lawyer with expertise in this area of real estate.

Can the assignor’s realtor market the assignment listing on MLS or REALTOR.ca?

Sometimes. Double check with your builder, as it depends on whether they permit advertising.

What happens if the construction, occupancy, closing, or unit transfer date is delayed?

In the event of a delay, the agreement is still valid. This means the assignee has agreed to take on the agreement and all responsibilities associated with it, including delayed construction or occupancy.

What if the assignee doesn't close?

This is no different than any other property sale, meaning the assignor, in most cases, is not released from the obligations under their original purchase agreement. In this situation, both the assignor and assignee will be liable.

What is the cost of assigning an Agreement of Purchase and Sale?

If the developer consents to the arrangement, there will generally be an administration fee and legal fees. These fees will vary. Consult the original purchase agreement and the developer for specific information.

When does the assignor get their money?

This generally depends on the closing date and the terms of the agreement that the assignor and assignee agreed on. Usually the assignor is paid when:

• the assignee takes possession or,
• when the developer approves the process, if applicable or,
• when the assignee obtains legal title

Who gets the interest, if any, payable by the builder on the original deposits?

Unless otherwise specified, the interest is likely to be paid to the assignor.

Who pays the interim occupancy costs?

Once the assignment is finalized, the assignee will typically pay occupancy costs.

What closing fees are payable?

After the condominium is registered, the builder transfers the ownership title to the assignee. The assignee pays the balance to the builder and any amount still owed to the assignor. Some of the costs the assignor may pay include:

• Estimated property taxes for up to 2 years
• Hydro/water/gas meter installation and connection charges (approx. $500–$700 per meter)
• Development charges/levies (potentially thousands of dollars)
• Tarion New Home Warranty (ranging from $600–$1,900. See Tarion website for fee structure)
• Discharge of builder’s mortgages (approx. $200–$300 per mortgage)
• Builder’s lawyer’s Law Society charge (approx. $70)
• Two months of occupancy fees for reserve fund
• Other amounts set out in the Agreement of Purchase and Sale

These costs are typically not financed with a mortgage. The assignee is responsible for the following additional fees:

• Legal fees and disbursements
• Land transfer tax (provincial and municipal)
• GST/HST rebate
• Municipal levies

If you’re interested in either buying or selling an assignment, you need a realtor who is experienced in finding, negotiating and drawing up the offer for these types of sales. This means you’ve come to the right place! We have a wealth of expertise, knowledge and resources when it comes to assignment sales and we would be more than happy to discuss the idea with you.

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What is A Condo Assignment?

Have you heard about buying a condo on assignment?

It’s becoming more and more common in the real estate market. But can you really take over another person’s mortgage?

Let’s take a look at how assignments work, their advantages, disadvantages and how you might use this strategy to get your dream condo.

Defining Assignment of Contract

An assignment is when a Seller (assignor) sells their interest in a property before they take possession – in other words, they sell the contract they have with the Builder to a new purchaser.

When a Seller assigns a property, they aren’t actually selling the property (because they don’t own it yet) – they are selling their promise to purchase it, along with the rights and obligations of their Agreement of Purchase and Sale contract.

The Buyer (Assignee) of an assignment is essentially stepping into the shoes of the original purchaser.

In short, an assignment clause allows the assignee (buyer) of a home to sell the place before they take possession of it. 

Are Assignments Legal?

Yes. Real estate contracts are assignable under the law unless the contract expressly forbids it.

Assignments are legal and can be a beneficial tool for both buyers and sellers when done correctly.

Example: If a buyer’s financial or personal circumstances change prior to completion, 

They can assign the contract to another buyer without canceling the arrangement with the seller if they choose to.

How is Assignment Different from A Regular Real Estate Transaction?

Assignment of Contract differs from a regular real estate transaction because in an assignment you are not buying or selling a home, rather you are buying or selling an interest in a contract to purchase a home once it’s complete.

The Paperwork involved with an assignment is a bit more complicated than your standard Real Estate Transaction.

Why do Assignments Happen?

1. buyer’s circumstances.

Often when people invest in pre-construction condos, there is a significant amount of time between when the initial contract is signed and the completion.

During that time, it’s very common that a Buyer’s circumstance might change like: loss of employment, death, critical illness etc. What worked for a Buyer few years ago may not work at the time of closing.

2. Financial Constraint:

Another reason is that that buyer might not be able to complete on the transaction due to insufficient funds or financing problem.

In some cases, it is cheaper to assign the contract to a new buyer than reneging on the sale.

3. Speculative Investing: 

Some investors just don’t have the intention of closing on the property and they are banking on quick appreciation of the property.

In resale, assignment of contract for profit is less common now than it used to be.

What is the Role of A Builder in Assignment Sale?

Remember that huge legal document you signed when you made an offer to buy a pre-construction condo? It’s time to take it out and read it.

Your Agreement of Purchase & Sale stipulated your rights to assign the contract. While most builders allow assignments, there is usually an assignment fee that must be paid to the Builder

There may be additional requirements as well, the most common being that the Builder has to approve the assignment.

Are There any Marketing Restrictions on Assignments of Contract ?

Yes, depending on the details of our contract, it will stipulate whether or not you can assign the contract or not and other terms & conditions.

One of the most common condition is: No Advertising on MLS, Realtor.ca or public facing forums, which makes it hard for a realtor to sell assignments

LUCKILY, there is a solution.

Realtors at Ipresale condos  specialize with assignment sales. They won’t advertise the property but they will use their current network and tap into their resources to get you best possible deals on your assignment.

Assignment Buyer's FAQs

#1: can i renegotiate the terms of the agreement in place.

No. When you’re buying a condo assignment, you’ll be expected to fulfill the terms and conditions that the original buyer agreed to

There might be some potential risks associated with buying an assignment, so it’s very important to work with an experienced real estate lawyer.

However, assignors might be amid a life transition, and they might be eager to make a deal and move on, which might help you get a better deal

#2: Which costs will I pay as a Buyer?

When purchasing a condo assignment, you will be responsible for all the closing costs when the building is registered with the city.

Closing costs include Land Transfer Tax, Development Charges, Utility Connection Fees, HST and any legal fees. It is also at registration that your mortgage will officially begin.

Keep in mind, you are completely exempt from HST on a pre-construction condo if you plan to use the property as your principal residence. Investors who are leasing their condo will need to pay HST upfront.

Your real estate lawyer can file for a full HST rebate, refunded approximately 4 to 6 weeks later, provided you have a one-year lease in place.

#3 Buyer's Advantages of Assignment

Brand New Suite:  You will get your unit much faster instead of waiting 2-3 years like in a typical pre-construction contract.

Built In Equity: When someone is selling a condo before closing, they are typically leaving some of the equity that the condo has earned on the table for you to inherit.

Less Competition:  Fewer people know about assignments.

Better Deal:  Sellers usually need to sell because they need to drop their equity. This can give you leverage for prices, deposits, and closing dates.

Assignment Seller's FAQs

#1: how will i get my deposit back.

The major fees when selling an assignment include the builder’s assignment fee, real estate commissions, and potential tax on the profit.

 Builder’s assignment fees can range from $1000 to as high as $20,000, depending on your contract.

  Real estate commissions on assignments are paid by the sellers. The assignment fee and builder’s lawyer fee is also paid by the sellers.

The profit earned from an assignent sale might be subject to tax. Only a tax accountant  that specializes in or a real estate transactions can advise you how best to claim your profits.

We have a team of accountants at Ipresalecondos.com , t hat can help you get started. Please contact us f or more information

#2: What Costs will I Pay as a Seller?

When a buyer buys on assignment (also known as a “assignee”), they normally pay the assignor their entire deposit.

On closing day, you should receive the money you’ve paid so far, combined with your profit (sometimes), in a conventional agreement. 

#3: How will I get my Deposit Back?

On closing day, you should receive the money you’ve paid so far, combined with your profit (sometimes), in a conventional agreement.

#4: How can I find a Buyer?

The builder may be able to cancel your agreement—and keep your deposit—if you market your assignment in breach of your contract.

Therefore, engaging with a seasoned realtor who is familiar with the assignment condo market is your best bet for finding a buyer.

Please contact us for getting started with an Assignment of Sale Pro

As an informed consumer you should be aware of the pros and cons of purchasing a pre-construction condo in addition to comprehending the assignment procedure.

Condo assignment sales, when done appropriately, can benefit purchasers, sellers, and developers. Just keep in mind that the paperwork involved with an assignment is a bit more complicated than your standard real estate transaction.

Many agents and even real estate lawyers are not familiar with this type of sale, so make sure you use an agent who’s familiar with how to complete an assignment sale.

At Ipresale Condos we have handled a number of assignments for our clients.

Please call or text at 604-825-8881 or email at  [email protected]  for an Assignment Pro.

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What is an Assignment?

Question: What is an Assignment?

An Assignment is when you sell your condominium investment before you take possession.

The time between when you purchase your condominium and when you take possession can range from 1-6 years depending on a number of variables (size and scope of project, how late in the cycle you purchased etc.). Until the possession date, there is no actual “ownership” of the condominium, therefore you are simply “assigning” the rights to the condominium to a new purchaser..  Many pre-construction condominiums offer an assignment clause for a small administration fee.

The benefits of an assignment are:

• Sell before you close
• No need to get a mortgage
• Potential to get original deposits and profits and “cash out”

The drawbacks of an assignment are:

• Most developers do not allow you to post your assignment listings on MLS, making it trickier to market and find potential buyers.
• No two assignment deals are ever the same which increases the complexity of the deal
• If the new buyer is unable to close on the condominium for whatever reason, the original purchase remains responsible to close.

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6 Tips to Consider When Buying New Condos on Assignment Sales

As far as new condos for sale in Toronto  are concerned, purchasing a pre-construction unit is quite common. Sometimes, it also consists of entering into a contract for assignment sales. Before we discuss how to handle such transactions, let us understand the meaning.

What is an Assignment Sale?

An assignment sale refers to the sale of a contract stating the purchase of a pre-construction condominium unit. It indicates that since the building has not been registered, no one can take or transfer the title of the condo. However, you can sell the contract. Once the builder registers the building, you could sell the property and along with the title.

The assignment clause of the contract comes in handy when you have purchased a new pre-construction condo but have to sell it before the completion of construction due to reasons such as relocation. It protects you from accruing any financial penalty.

Tips to Make Buying a New Condo on Assignment Sales Easier

• Assignment closing date - when your assignment sale transaction with the original home buyer is completed.
• Occupancy closing date - the first closing date when the buyer gets the condo’s key from the builder.
• Final closing date - is when the title of the property will transfer to the buyer’s name.
• An assignment closing date when purchasing a new unit is usually before or after the Occupancy Closing date.
• It is Not Like Purchasing A Resale Condo Buying an assignment sale unit lets you acquire the title from the original customer. It does not refer to buying the condo itself. You will get the ownership of the unit only after the Final Closing Date which is why it is not like a resale purchase.
• You will be responsible for the 20% down payment paid by the original purchaser to the builder.
• You will also have to pay the difference amount between the current asking price or the new purchase rate of the condo and its original value.
• Consent of the Builder is Essential The builder’s approval is required to complete the transaction of assignment sales. In some instances, they may not agree if the date of assignment sale is around the final closing date. This is because the builder would want to make sure that there are no confusions as to the final name on the contract.
• Mortgage Approval For the builder to approve the transaction, you must provide Proof of Sufficient Funds to indicate that you can afford the purchase. The amount eligible for a mortgage is equal to the original purchase price less the down payment paid to the builder.
• Do Not Be in a Hurry Since purchasing a new condo requires a substantial amount of investment, it is essential that you consider all the aspects before entering into a sales contract.

The Davies Has Exceptional New Toronto Condos for Sale

If you are looking for a new Toronto condo for sale, get in touch with our sales team by calling 647-360-9588 or register online to view our floor plans .

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What You Need to Know About Assignment Sales

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What is an assignment sale? We get this question quite often from both investors and end-users when it comes to the Toronto condo market, especially with the dramatic rise in condo buildings and pre-construction sales. Assignment sales can be a great opportunity for everyone involved, from the seller to the buyer. But working with a seasoned real estate broker is one of the most important things you can do. An assignment sale isn’t a typical transaction and there are many things you need to know before moving forward.

What Does an Assignment Sale Mean?

An assignment is a sales transaction where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer’s rights and obligations of the Agreement of Purchase and Sale, before the original buyer closes on the property (that is, where they take possession of the property). The assignee is the one who ultimately completes the deal with the seller. In other words, an assignment clause allows the buyer of a home to sell the place before they take possession of it. Although an assignment sale is possible for both home and condos, it’s much more popular among condo pre-construction buyers.

Why Would Someone Want to Sell Their Condo on Assignment?

With pre-construction condo purchases, the sale of suites typically takes place several years before the building is built. It’s a long time in between buying the suite and actually taking occupancy of it. And with this lag time comes life changes – a new job outside of the city or in a different province, a new family that’s expanding with children, etc. What worked for a particular buyer years ago may not be the current case at closing time.

Financial reasons is also another reason to sell on assignment. Perhaps the purchaser can no longer be able to close on the condo, or perhaps it’s an investor who bought pre-construction with no intention of closing on them, therefore using an assignment sale strategy to profit, based on quick appreciation in the area.

Often with pre-construction sales, there’s a long lag between when the original contract is entered into, when the Buyer can move in (the interim occupancy period) and the final closing. It’s not uncommon for a Buyer’s circumstances to change during that time…new job out of the city, new husband or wife, new set of twins, etc. What worked for a Buyer’s lifestyle 4 years ago doesn’t always work come closing time.

How Do Assignment Sales Work?

We completed an assignment sale for a client at 87 Peter Street which was a new building that has occupied, but not registered yet. Our client purchased a 1-bedroom, 1-bathroom condo pre-construction for $320,000.00. He was looking to sell the unit on assignment and listed it at $525,000.00. We received an offer of $500,000 which the seller was comfortable accepting.

Typically, when assignment sales takes place, the seller is looking for a buyer who can provide him with a purchase deposit that equals what he had to put down – usually 20% of the original purchase price. After providing the seller with this sum, the deposit paid to the builder now becomes the new purchasers deposit. Any upside to the seller can be paid based on the negotiated terms – sometimes when the seller gets a mortgage for the condo, or even earlier – it’s all based on terms of the assignment deal.

Overall, assignments sales are not to be overlooked – there can be some fantastic opportunities to get into a highly desirable building that you may have missed out on or purchase a condo that you may otherwise not have had access to. But the importance of working with a realtor and lawyer who know the ins and outs of these deals is the key to making them work for you.

If you’re interested in learning more about Assignment Sale and some of the great opportunities currently available, simply fill out the form below – we’ll get in touch right away.

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What Is A Condo Assignment?

When purchasing a pre-construction condo unit, a buyer signs an Agreement of Purchase and Sale with the condo builder, that reserves their ‘right’ to the unit they purchased.

An “ Assignment ” is when that condo buyer then sells the condo prior to the completion of ownership. This typically happens between the time they originally signed for the condo, and the time the building is completed.

A “Resale” transaction is when a seller actually has ownership, the building is completed and already registered, and they decide to sell. This is different than an Assignment sale.

In the case of an Assignment sale, the seller doesn’t actually own anything other than an Agreement of Purchase and Sale they originally signed. The condo isn’t registered yet, and in some cases, the condo isn’t even built yet. They are selling the “right” to that condo. So, the seller is “Assigning” ( or selling ) that Agreement of Purchase and Sale and the rights of the condo over to the new buyer.

Benefits of an Assignment for Sellers:

• Sell before you close
• Avoid closing costs
• Avoid occupancy fees
• No need to get a mortgage
• Cash out (get back the deposits you have paid and profit)

Benefits of an Assignment for Buyers:

• Buy a brand new, never lived in condo
• No Waiting (pre-construction condos typically take 1-5 years to build)
• Tarion Warranty
• Original VIP incentives on the contract
• Stronger negotiating power

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ASSIGNMENT SALE : 1 BEDROOM + DEN AT CROSSTOWN 3 CONDOS

ASSIGNMENT SALE : 1 BEDROOM + DEN AT VERDÉ CONDOS

ASSIGNMENT SALE: STUDIO AT ARTWORKS CONDOS

Buying Condos on Assignment — A Quick Guide

Buying condos on assignment is becoming the norm in the real estate business. Investors use this strategy to purchase a condo cheaply and sell before closing to maximize profit. Understanding what a condo assignment is can be difficult, especially for newbies in the niche. Our team will discuss condo assignments and what you need to know before diving in to your next investment. 

What Is a Condo on Assignment Sale?

A condo on assignment sale is a written document issued to the purchaser of a pre-construction condo unit from the builder or an investor intending to sell. This agreement indicates that since the building hasn’t been officially registered, no one can take possession of the condo unit. However, you are allowed to sell the agreement to an interested buyer before the building is fully registered.

You will only get full ownership of the building after the final closing date – the period when the property title will be transferred to you. Once the property has become registered, you can sell the property and the title. It’s after the closing date that you will begin your mortgage payment.

Remember, the condo unit isn’t officially yours, even after making your down payment. You will only get a condo assignment sale as proof of your down payment and not the property’s title until after the closing date.

Why Purchase a Condo on Assignment?

There are reasons why buying condos on assignment is a familiar strategy investors and realtors use these days. If you already bought a pre-construction condo, you can maximize profit before closing and registration by selling the contract to another buyer. This is called “flipping.”

If you also have to relocate or out of cash, you can sell the contract to an interested buyer and get your money. Here, the agreement can protect you from accruing further costs.

Another reason to purchase a condo on assignment is that you’ll be buying at a price less than the market value when it’s completed. 

Important Factors to Remember

When buying a condo on assignment, you need to keep the following factors in mind.

You will be liable to pay taxes, such as Land Transfer Tax and other legal fees after the final closing date. Our experts recommend that you employ the services of a tax advisor for proper guidance.

Down Payment

Buying a condo on assignment sale demands that the builder collects a down payment from you. The deposit structure varies from builder to builder and the current phase of the building construction, but the typical range is between 15% – 30% of the total price of the building.

The builder must approve all the transactions regarding assignment sales. Some builders may not approve until the date of assignment sale is near the final closing date to avoid any confusion on whose name the property will be registered to.

You are mandated to provide Proof of Sufficient Funds to show that you can pay for the purchase before the builder can issue the contract. The remaining amount after the initial down payment is paid in the form of a mortgage.

The builder automatically assumes that you are using your condo as your primary residence after registration. Therefore, you become obligated to assign the HST Rebate entitlement to the builder.

Real Estate Broker

You need the help of a professional and seasoned real estate broker to help you with the transaction and ensure that it goes smoothly. This is because the paperwork involved is relatively complicated, and many agents or real estate brokers may not fully understand how condo on assignment sale works. 

Closing an Assignment Sale

When buying a condo on assignment sale, you will be responsible for closing costs once the builder registers the building. These costs include Land Transfer Tax, Utility Connection Fees, Development Charges, etc. [1] However, you are exempted from HST if you plan on using your condo as your primary residence. 

When purchasing a condo on assignment sale, you need to take note of the following:

• Assignment closing date (when the transaction is completed)
• Occupancy closing date (the first date when the builder hands over the keys to the purchaser)
• Final closing date (when the title of the property is transferred to you)

How do you buy an assignment for a condo?

To buy an assignment for a condo, you must be ready to purchase one of the pre-construction condo units from the builder. Afterward, you can request an assignment from the builder, showing that you own one of the units.

How does a condo assignment work?

A condo assignment transfers partial ownership of the building from the builder to the buyer. When buyers decide to purchase a pre-construction condo unit, they agree with the builder, signifying partial ownership.

When buying condos on assignment, it’s vital that you go through all these factors, as explained by our real estate experts, to avoid any complications, especially during the closing dates. An error could jeopardize your chances of buying a pre-construction condo, so take your time while going through the transaction. 

More pages:  

• Toronto condo and housing bubble 
• Advantages and disadvantages of condo living 
• Expenses of condo building 
• Assignment sale in Toronto
• Assignment sale in Vancouver
• Purchasing condo in Canada  

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Asssignment

Please submit your assignment sale information here and send your property photos by email to the following email address:.

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What is an Assignment Sale?

A Contract Assignment occurs when the Original Buyer [Assignor] who purchased from the Developer chooses to “Sell” their contractual rights in their contract to a new Buyer [Assignee] before the Completion date. The Buyer can transfer the contract for any price, even for a higher price than they paid for the property. (If the Original Buyer [Assignor] received the Assignment Clause at the time of purchase from the Developer).

In the Assignment, the new Buyer [Assignee] must transfer the money to the Original Buyer [Assignor] in this way:

* Deposit + Profit.

The Original Buyer is not truly selling the property (Because they technically do not own it yet) but, instead, is technically selling his or her interest and rights in the contract.

Pros of Assignment for the Buyer (Assignee):

• Buying a property at a reduced Discounted price compared to purchasing a resale unit at market value.  The Luxury of Buying a Brand New Unit.
• The Assignee will get his or her unit much faster instead of waiting 4-6 years like in a typical pre-construction contract.
• The Assignee may still be able to select his or her own finishes, colors, and upgrades. (Depending on how far along with construction ).
• Assignees will likely get great incentives like the seven-year Tarion Warranty Program and other incentives from the builder.

Assignment Form

Pros of assignment for the seller (assignor):.

• Get your deposit back and lock in your profit sooner,.
• Avoid paying land transfer taxes.
• Avoid paying HST.
• Don’t need to take out a mortgage or incur any other closing costs.

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Guide to Condo Assignment Sales

If you’ve looked into purchasing pre-construction condos in Toronto you’ve come across the term “Assignment Sale”. Often Developers will offer allowing Assignment Sales as an added incentive for buyers. Or you’ll come across an agent or seller listing an assignment sale of a pre-construction condo.

The recent growth of the pre-construction condo market has seen a rise in this type of transaction, and so it’s important for buyers to understand how Assignment Sales work.

What is an Assignment Sale

An “Assignment” is a real estate transaction where the original buyer (the “Assignor”) sells their buyer’s rights to another buyer (the “Assignee”). In Toronto, assignments are common in pre-construction condos.

Assignor:  is the original buyer of the condo unit. The Assignor purchased the unit 3-5 years ago at the pre-construction sales phase directly from the builder. In an assignment transaction the assignor is the seller of this original agreement of purchase and sale.

Assignee:  is the buyer of the Agreement of Purchase and Sale from the Assignor. In an assignment transaction the assignee is the new buyer of the assignor’s agreement of purchase and sale

When does an Assignment Sale transaction happen

Assignments take place before Closing – before the buyer actually has position or title of the condo. Which is why the buyer is technically selling “buyer rights” or just the contract at this stage.

Who benefits from Assignment Sales

Assignments can be a useful tool for buyers and sellers.

Original Buyers, the “Assignor” benefit by not having to close on their condo purchase. That means the Assignor is not responsible for paying any closing costs. If occupancy hasn’t taken place at the time of signing, then the Assignor does not have to pay any occupancy fees. Instead, the new buyer or Assignee takes over and closes on the purchase with the Developer. Given the long lead times for pre-construction condos between purchase and closing, original buyers find the ability to make an assignment sale reassuring and beneficial since they are not locked into a contract. More aggressive real estate investors looking for more immediate ROI use assignment sales to close out their position and reap the margins realized on pre-construction condos before closing.

New Buyers, the “Assignee” benefit by getting an advantage in price relative to other ready-built condo properties on the market. Assignees also get a new, unlived home. If the Assignment takes place before the selection of finishes, the Assignee gets to make final colour and finishes selections and customize to their liking. Assignees also close in a shorter time period when compared with buying at a pre-construction project at an earlier launch phase. Finally, and perhaps most importantly, Assignees have to reimburse the Assignor all deposits already paid. These deposit amounts are on the original purchase price on the contract and not at today’s market value.

Risks associated with an Assignment sale

For the New Buyers, the “Assignee” when you purchase an assignment you take on all the terms and conditions of the original Agreement of Purchase and Sale (APS) contract. So if the original Buyer did not get their Lawyer to review the agreement to make sure things such as levies were capped then those risks are passed on to you. Assignee can protect himself by making sure the Assignment agreement has a clause that makes offer conditional on your Lawyer reviewing the original APS.

Assignee is also responsible for all the costs associated with purchasing brand new: Tarion Warranty fees, Builder fees, Development Levies, Utility connection fees and contribution to Condo Board reserve fund.

For Original Buyers, the “Assignor” risks include responsibility for any assignment fees charge by the Builder. In the event that Assignee (Buyer) can’t close the transaction then Builder may request that Assignor closes as per the terms of the original APS.

Builder will also stop communicating with Assignor and deal exclusively with Assignee once they have agreed to and executed assignment agreement. This makes it difficult for Assignor to get important updates. It’s therefore important that Assignor Lawyer keeps in touch with both the Builder and Assignee Lawyer until Final Closing.

Delays in occupancy or closing dates

The assignment remains valid regardless of delays. The Assignee has taken on the agreement and all buyer’s rights and responsibilities.

Assignee is unable to close

Typically the Assignor is not released from closing and both the Assignor and Assignee will be liable. We advise consulting a real estate lawyer to understand the terms and conditions with regards to assignments in the original agreement of purchase and sale.

Costs associating with assigning a unit

Developers typically charge an administration fee to process and approve assignment transactions. Both Assignors and Assignees are also strongly encouraged to involve a Lawyer, so there are legal fees to consider as well.

Payment of the interim occupancy fees

Typically the Assignee will pay any associated occupancy fees and any final closing costs unless negotiated otherwise in the assignment terms.

When does the Assignor get their money

Payment terms vary by agreement and are negotiated between the Assignor and Assignee. Typically the Assignor gets paid (partial or full deposit amounts) when the contract is signed, or the Assignee closes and gets legal title, or when the Assignee moves in and occupies the unit.

Who is entitled to the interest accrued by the original deposits made by the Assignor

The interest will likely be paid by the Developer to the Assignor, however this can be specified in the assignment terms.

Tax implications of Assignments sales

Buyers and sellers are also encouraged to get advice from a tax accountant. There are tax implications (GST/HST) where it is determined that the Assignor’s primary intent was to flip the property for profit.

Steps involved in an Assignment Sales process

It is crucial to work with an experienced agent when dealing with assignment transactions. Real estate Assignments are legally-binding, and it’s important to understand what the clauses mean and how they directly affect you. Buyers and sellers are also encouraged to get legal advice.

1. Ensure original Agreement of Purchase and Sale includes an Assignment clause , and understand the terms and conditions imposed by the Developer on assignment transactions. For example, some Developers may include restrictions that prevent any assignment sale until a certain percentage of the building has been sold directly by the Developer, typically 90-100%. There may also be additional restrictions on advertising or listing your unit for an assignment sale. Each Developer and project is different. Typically, developers have to grant permission to allow the assignment of units.

2. Find a new buyer, the “Assignee”  Finding a buyer can get tricky if a Developer prohibits listings and advertising. It is crucial to work with an agent that specializes in assignment sales to help you work around these restrictions to find a buyer.

3. Complete the required paperwork. Assignment sales involve a lot of paperwork and it is critical that the Assignment Agreement protects the interest of all parties involved. The diligence of an experienced agent and lawyer are crucial here due to the important points to be considered such as Developer’s Approval, Lawyer Reviews, responsibility for HST, Occupancy fees, Levies and closing costs etc. Additional factors to consider include, interest payments on deposits held by the Developer, and incentives per original agreement of purchase and sale to be credited by the Developer on final closing.

Assignments are great tools that offer value and benefits to both sides of the transaction, Assignors and Assignees. Due to the clauses and considerations involved, Assignments can often get complicated, making it extremely important to work with an experienced agent and real estate Lawyer to help mitigate risk.

Are you considering an assignment sale or interested in learning more? Drop me a line and let’s start talking!

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Marilyn Mosby's Florida condo targeted by federal prosecutors for possible seizure

by Mikenzie Frost | [email protected]

BALTIMORE (WBFF) -- — Federal prosecutors are seeking to seize Marilyn Mosby’s Florida condo after she was convicted on one count of mortgage fraud and two counts of perjury, teeing up what could be a legal battle over the property.

In court filings, prosecutors are seeking to seize the condo Mosby bought in February 2021 for $476,000 in Long Boat Key. If there’s a profit on the sale of the vacation condo, known as The Tree House, Mosby would get her $47,600 down payment back, according to the court documents.

“While Ms. Mosby should not be allowed to profit from her crimes, neither should the forfeiture process be used to deprive her of property not subject to forfeiture,” prosecutors wrote in the documents.

When Mosby was first indicted, prosecutors indicated they might seize the property if Mosby was convicted. At the time, the former top prosecutor in Baltimore City owned two Florida vacation homes – the condo in Long Boat Key as well as a home in Kissimmee. However, Mosby sold the Kissimmee property for $696,000 in November 2021; Mosby made a profit of $151,000, according to online records.

In November 2023, a jury found Mosby lied twice when she withdrew approximately $80,000 from her city retirement account, claiming she suffered a COVID-related financial hardship with qualifying for the withdrawal without paying a penalty. That money was then used as down payments on the vacation properties in Florida.

In January, a separate jury found Mosby guilty of one count of federal mortgage fraud, determining she knowingly provided false information on mortgage documents. Prosecutors charged her with two counts of mortgage fraud, but the jury found her not guilty on one of the charges.

Mosby faces up to 40 years in prison for the convictions, though the maximum is unlikely. She is scheduled to be sentenced on May 23, and Judge Lydia Griggsby will also hold a hearing regarding the property seizure that same day.

Meanwhile, Mosby publicly asked President Joe Biden for a pardon during an appearance on MSNBC’s The Reid Out with Joy Reid. During her appearance, Mosby did not appear contrite or accept responsibility for what happened. Instead, she maintained her innocence and echoed what she has long said was a politically motivated prosecution rooted in racism.

“I’ve done absolutely nothing wrong, nothing illegal, nothing criminal,” Mosby said during her appearance with Reid.

Mosby was tried by a U.S. Attorney’s Office led by Erek Barron, a Democrat who was nominated to serve as the U.S. Attorney for Maryland by President Joe Biden. Barron is also Maryland’s first African American U.S. Attorney. Both trials have been before Judge Lydia Kay Griggsby, also a Biden-era appointee.

Follow Political Reporter Mikenzie Frost on X and Facebook . Send tips to [email protected].