What’s an assignment?  

An assignment occurs when a seller transfers their interest in a property before taking possession. Essentially, the seller is selling the contract they have with the builder, not the property itself. The buyer, referred to as the Assignee, steps into the shoes of the original purchaser (Assignor) and assumes the rights and obligations of the contract.

Do assignments only happen with pre-construction condos?

Assignments can occur with any type of property, as long as the original contract doesn’t prohibit it. This can include both pre-construction and resale homes.

Why would someone want to assign a condo?

There are many reasons for assigning a contract. Some common ones include changes in personal circumstances, financial issues, or speculative investors looking to lock in profits before closing.

What can be negotiated in an assignment sale?

The terms of the original contract with the builder cannot be changed. However, the price the Assignee pays to the Assignor, including the original deposit, can be negotiated.

Builder Approval and Fees

Most builders allow assignments, but they typically charge a fee, which can range anywhere from $750 to $7,000. Builder approval is usually required for the sale.

Marketing Restrictions

Pre-construction contracts often prohibit marketing an assignment on MLS or public platforms. Violating this can result in cancellation of the contract and loss of deposit. Always check your agreement for specific rules.

So how can you find a buyer?

Many REALTORS specialize in assignment sales and have networks of interested buyers. Working with one of these professionals can help you find the right buyer despite marketing restrictions.

What are the tax implications of real estate assignment?

Profits from assignments are generally taxable. The Assignee is responsible for land transfer taxes and potentially HST. Consult an accountant to get accurate tax advice.

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

Aside from builder fees, you’ll likely need to pay legal fees and possibly a real estate commission if you use an agent.

How does the closing of an assignment work?

There are two closings in an assignment: first between the Assignor and Assignee, and then between the Assignee and the Builder. The first involves the original purchaser receiving their deposit and any profit, while the second involves the Assignee completing the sale with the builder.

Assignments vs. Resale: Which is Better?

Choosing between assigning and waiting for resale depends on factors like market conditions, lifestyle needs, and potential financial gains. Both options have pros and cons, so consulting with a real estate expert is advisable.