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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.

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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What Is an Assignment Sale? Understanding the Ins and Outs of This Real Estate Process

An assignment sale occurs when the original buyer of a property (the assignor) transfers their rights and obligations of the property contract to another buyer (the assignee) before the official closing of the sale.

This process allows the assignee to step into the original purchaser's shoes, taking on the commitments of the property purchase, which could be a pre-construction condo, house, or any other form of real estate.

Now, let's delve deeper into understanding how assignment sales work, their intricacies, and what they mean for buyers and sellers in the real estate market.

Demystifying the Elements of an Assignment Sale

Embarking on a real estate journey often introduces many terms and processes that may seem complex at first glance, with 'assignment sales' leading the pack in complexity and confusion.

Whether you're the original buyer looking to navigate away from closing costs or a savvy purchaser hunting for a valuable investment, understanding the nuts and bolts of assignment sales is an invaluable asset in the dynamic landscape of real estate.

How Assignment Sales Work

Assignment sales introduce a unique dynamic in real estate transactions, particularly in bustling markets like Vancouver Island and the Sunshine Coast .

When you buy a pre-construction unit, the property is yours, albeit not immediately ready for occupation. Life changes or financial circumstances sometimes evolve between the original purchase agreement and the final closing, necessitating a shift in plan.

Here's where assignment sales come into play. The original buyer can sell their interest in the property before the final sale, sidestepping typical hurdles like mortgage payments or land transfer taxes that come with a regular sale. This method provides a strategic avenue for purchasers to hand over their contractual obligations to another party without waiting for the property's completion.

The Assignment Clause: A Vital Cog in the Wheel

The assignment clause in the original contract is central to these types of transactions. This clause allows the transfer of the buyer's rights and responsibilities to another person.

It's crucial to understand that not all pre-construction sales agreements have an assignment clause, and most builders or developers might impose restrictions or require consent before any assignment deal can proceed.

Understanding the Financials: Costs and Fees

Engaging in assignment sales tends to involve several costs that both the buyer and seller must anticipate.

These include the assignment fee charged by the developer, legal fees for contract transfer, and possibly higher legal fees due to the complexity compared to a resale property. There could also be tax implications depending on the nature of the transaction and the parties involved.

Navigating Through the Interim Occupancy Period

A common scenario in assignment sales, especially in pre-construction condos, is dealing with the interim occupancy period.

This period arises when the assignee can take possession (though not ownership) of the unit while the property is not officially registered. During this phase, the assignee pays occupancy fees, akin to rent, which don't go towards mortgage payments.

Understanding this period helps both parties make an informed decision and prepare for the financial responsibilities it entails.

The Pros and Cons of Assignment Sales

Navigating assignment sales requires a balanced understanding of its advantages and drawbacks. While these transactions open avenues for lucrative deals and flexible arrangements, they also carry inherent risks and complexities that can impact buyers and sellers.

This exploration will provide clear insights, aiding your decision-making in the vibrant real estate market.

The Bright Side: Benefits of Assignment Sales

Less Competition, More Opportunities: One advantage that makes assignment sales attractive, particularly in areas prone to bidding wars like Vancouver Island , is less competition. Fewer buyers are willing or informed about engaging in this kind of sales transaction, reducing the frenzy often seen in hot real estate markets. This situation can present a more favourable buying environment for those ready and willing to proceed with an assignment purchase.
Potential for a Better Deal: For buyers, assignment sales sometimes offer the opportunity to get into a brand-new unit at a potentially lower cost. Since the assignee is stepping into an existing agreement, they might benefit from the original purchase price, which could be lower than current market rates, especially in fast-growing communities.
Flexibility for the Original Buyer: For the original buyer, an assignment sale offers a way out, potentially recouping the deposit paid and avoiding financial penalties that might come with breaking a purchase agreement. This strategy can be particularly advantageous if the purchaser's circumstances change and needs to free up cash or avoid taking on a mortgage.

The Flip Side: Challenges and Risks of Assignment Sales

Complexity and Higher Legal Fees: Assignment sales are not your straightforward real estate transaction. They require additional steps, such as securing the developer's consent, and the legal process is more complex than purchasing resale properties. As a result, both parties might incur higher legal fees to facilitate the transaction.
Financial Overheads and Closing Costs: For the assignee, the initial cost outlay can be substantial for the assignee. They must reimburse the original buyer's deposit, pay the assignment fee, cover land transfer taxes, and prepare for other closing costs. These expenses require careful consideration and financial planning.
Uncertainties and Marketing Restrictions: In some cases, developers impose marketing restrictions, making it challenging to advertise the assignment sale. Additionally, the assignee, now the new buyer, takes on certain risks like development charges or changes in market conditions, which could affect the property's value upon final closing.

Making the Move: Deciding If an Assignment Sale Is Right for You

Deciding to engage in an assignment sale is a pivotal moment, requiring a blend of financial foresight and market understanding.

As we delve into this decision-making process, we'll consider critical personal and economic factors that ensure you're making a choice that aligns with your real estate ambitions and lifestyle aspirations.

Conduct Due Diligence: Know What You're Getting Into

Involving real estate agents experienced in assignment sales is a prudent step for guidance through the intricacies of these transactions.

Also, consulting with a real estate lawyer ensures you understand the legalities, your rights, and any potential liabilities you might be assuming.

Consider Your Financial Standing and Long-Term Goals

Reflect on your current financial health and future plans.

For original buyers, if life changes dictate a change in your real estate investments, an assignment sale could be a viable exit. For potential assignees, consider whether this buying pathway aligns with your investment strategy and if you're comfortable with the associated risks.

Stay Informed About Market Conditions

Market dynamics greatly influence real estate valuations. A clear picture of current trends, especially in your buying area (like Fort St John or cities in the Okanagan ), helps make an informed decision.

Understanding these trends could offer insights into whether you're setting yourself up for a profitable investment or a potential financial misstep.

Bringing It All Home with LoyalHomes.ca

Navigating the world of assignment sales can be a complex journey, laden with opportunities and pitfalls. Whether you're considering selling your contractual rights or stepping into an existing purchase agreement, the route is layered with legal, financial, and market considerations.

At Loyal Homes, we understand that your real estate journey is more than just a transaction; it's a pivotal chapter in your life story. We're here to guide you through each step, ensuring you're equipped with the local, accurate, and relevant information to make decisions confidently. Our team is committed to providing a service that stands a notch above the rest, focusing on relationships and community at its core.

Ready to take the next step in your real estate adventure in British Columbia? Whether it's finding the perfect neighbourhood, exploring investment opportunities, or seeking your dream home, we're here to assist.

For a personalized experience tailored to your unique needs, consider our Personalized Home Search . If you're on the selling side and need to understand your property's current market standing, request a Free Home Valuation . Or, for any other inquiries or guidance, feel free to contact us . Your journey to a successful real estate experience in British Columbia starts with LoyalHomes.ca, where your peace of mind is our highest priority.

Frequently Asked Questions

Is it good to buy an assignment sale.

Buying an assignment sale can be advantageous, offering lower purchase prices compared to current market rates for similar properties, especially in hot real estate markets. However, this venture also requires thorough due diligence to ensure that the agreement terms, property details, and financial implications align with your investment goals.

Can You Make Money on an Assignment Sale?

Yes, there is a potential to make money on an assignment sale, particularly if the property's value has increased since the original purchase date. This profit occurs due to appreciation over the period, especially in high-demand areas, but it's crucial to factor in any assignment fees, legal costs, and tax implications to understand the net gainfully.

What Are the Risks of Buying an Assignment Sale?

The risks include a lack of guarantees on the final product as specifications might change, potential delays in construction, and complexities in financing, often requiring a more substantial initial deposit. These elements underscore the importance of legal counsel to navigate contract specifics and to prepare for any contingencies or additional costs.

How Do I Sell My Pre-Construction Assignment?

Selling a pre-construction assignment involves marketing to potential buyers, typically requiring the developer's consent and possibly entailing a fee. Engaging with a real estate professional who understands the local market nuances and legalities of assignment sales is essential to ensure a smooth, compliant transaction.

Do I Pay Tax on Assignment Sale?

Tax implications on assignment sales can be multifaceted, potentially involving income tax on profits and GST/HST on the purchase, depending on factors like the property type and the seller's tax status. It's advisable to consult with a tax professional to accurately determine specific obligations and strategize for tax efficiency based on your circumstances.

What Is the Difference Between a Transfer and an Assignment?

A transfer and an assignment differ significantly; a transfer involves changing property ownership after a project's completion, whereas an assignment sells one's interest in a property before it's finished. Understanding this distinction is crucial as it affects the contractual obligations, rights transferred to the new buyer, and the legal and financial processes involved in the transaction.

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How To Navigate The Real Estate Assignment Contract

What is assignment of contract?

Assignment of contract vs double close

How to assign a contract

Assignment of contract pros and cons

Even the most left-brained, technical real estate practitioners may find themselves overwhelmed by the legal forms that have become synonymous with the investing industry. The assignment of contract strategy, in particular, has developed a confusing reputation for those unfamiliar with the concept of wholesaling. At the very least, there’s a good chance the “assignment of contract real estate” exit strategy sounds more like a foreign language to new investors than a viable means to an end.

A real estate assignment contract isn’t as complicated as many make it out to be, nor is it something to shy away from because of a lack of understanding. Instead, new investors need to learn how to assign a real estate contract as this particular exit strategy represents one of the best ways to break into the industry.

In this article, we will break down the elements of a real estate assignment contract, or a real estate wholesale contract, and provide strategies for how it can help investors further their careers. [ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

What Is A Real Estate Assignment Contract?

A real estate assignment contract is a wholesale strategy used by real estate investors to facilitate the sale of a property between an owner and an end buyer. As its name suggests, contract assignment strategies will witness a subject property owner sign a contract with an investor that gives them the rights to buy the home. That’s an important distinction to make, as the contract only gives the investor the right to buy the home; they don’t actually follow through on a purchase. Once under contract, however, the investor retains the sole right to buy the home. That means they may then sell their rights to buy the house to another buyer. Therefore, when a wholesaler executes a contact assignment, they aren’t selling a house but rather their rights to buy a house. The end buyer will pay the wholesale a small assignment fee and buy the house from the original buyer.

The real estate assignment contract strategy is only as strong as the contracts used in the agreement. The language used in the respective contract is of the utmost importance and should clearly define what the investors and sellers expect out of the deal.

There are a couple of caveats to keep in mind when considering using sales contracts for real estate:

Contract prohibitions: Make sure the contract you have with the property seller does not have prohibitions for future assignments. This can create serious issues down the road. Make sure the contract is drafted by a lawyer that specializes in real estate assignment contract law.

Property-specific prohibitions: HUD homes (property obtained by the Department of Housing and Urban Development), real estate owned or REOs (foreclosed-upon property), and listed properties are not open to assignment contracts. REO properties, for example, have a 90-day period before being allowed to be resold.

What Is An Assignment Fee In Real Estate?

An assignment fee in real estate is the money a wholesaler can expect to receive from an end buyer when they sell them their rights to buy the subject property. In other words, the assignment fee serves as the monetary compensation awarded to the wholesaler for connecting the original seller with the end buyer.

Again, any contract used to disclose a wholesale deal should be completely transparent, and including the assignment fee is no exception. The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself.

The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers). As with any negotiations , proper information is vital. Take the time to find out how much the property would realistically cost before and after repairs. Then, add your preferred assignment fee on top of it.

Traditionally, investors will receive a deposit when they sign the Assignment of Real Estate Purchase and Sale Agreement . The rest of the assignment fee will be paid out upon the deal closing.

Assignment Contract Vs Double Close

The real estate assignment contract strategy is just one of the two methods investors may use to wholesale a deal. In addition to assigning contracts, investors may also choose to double close. While both strategies are essentially variations of a wholesale deal, several differences must be noted.

A double closing, otherwise known as a back-to-back closing, will have investors actually purchase the home. However, instead of holding onto it, they will immediately sell the asset without rehabbing it. Double closings aren’t as traditional as fast as contract assignment, but they can be in the right situation. Double closings can also take as long as a few weeks. In the end, double closings aren’t all that different from a traditional buy and sell; they transpire over a meeter of weeks instead of months.

Assignment real estate strategies are usually the first option investors will want to consider, as they are slightly easier and less involved. That said, real estate assignment contract methods aren’t necessarily better; they are just different. The wholesale strategy an investor chooses is entirely dependent on their situation. For example, if a buyer cannot line up funding fast enough, they may need to initiate a double closing because they don’t have the capital to pay the acquisition costs and assignment fee. Meanwhile, select institutional lenders incorporate language against lending money in an assignment of contract scenario. Therefore, any subsequent wholesale will need to be an assignment of contract.

Double closings and contract assignments are simply two means of obtaining the same end. Neither is better than the other; they are meant to be used in different scenarios.

Flipping Real Estate Contracts

Those unfamiliar with the real estate contract assignment concept may know it as something else: flipping real estate contracts; if for nothing else, the two are one-in-the-same. Flipping real estate contracts is simply another way to refer to assigning a contract.

Is An Assignment Of Contract Legal?

Yes, an assignment of contract is legal when executed correctly. Wholesalers must follow local laws regulating the language of contracts, as some jurisdictions have more regulations than others. It is also becoming increasingly common to assign contracts to a legal entity or LLC rather than an individual, to prevent objections from the bank. Note that you will need written consent from all parties listed on the contract, and there cannot be any clauses present that violate the law. If you have any questions about the specific language to include in a contract, it’s always a good idea to consult a qualified real estate attorney.

When Will Assignments Not Be Enforced?

In certain cases, an assignment of contract will not be enforced. Most notably, if the contract violates the law or any local regulations it cannot be enforced. This is why it is always encouraged to understand real estate laws and policy as soon as you enter the industry. Further, working with a qualified attorney when crafting contracts can be beneficial.

It may seem obvious, but assignment contracts will not be enforced if the language is used incorrectly. If the language in a contract contradicts itself, or if the contract is not legally binding it cannot be enforced. Essentially if there is any anti-assignment language, this can void the contract. Finally, if the assignment violates what is included under the contract, for example by devaluing the item, the contract will likely not be enforced.

How To Assign A Real Estate Contract

A wholesaling investment strategy that utilizes assignment contracts has many advantages, one of them being a low barrier-to-entry for investors. However, despite its inherent profitability, there are a lot of investors that underestimate the process. While probably the easiest exit strategy in all of real estate investing, there are a number of steps that must be taken to ensure a timely and profitable contract assignment, not the least of which include:

Find the right property

Acquire a real estate contract template

Submit the contract

Assign the contract

Collect the fee

1. Find The Right Property

You need to prune your leads, whether from newspaper ads, online marketing, or direct mail marketing. Remember, you aren’t just looking for any seller: you need a motivated seller who will sell their property at a price that works with your investing strategy.

The difference between a regular seller and a motivated seller is the latter’s sense of urgency. A motivated seller wants their property sold now. Pick a seller who wants to be rid of their property in the quickest time possible. It could be because they’re moving out of state, or they want to buy another house in a different area ASAP. Or, they don’t want to live in that house anymore for personal reasons. The key is to know their motivation for selling and determine if that intent is enough to sell immediately.

With a better idea of who to buy from, wholesalers will have an easier time exercising one of several marketing strategies:

Direct Mail

Real Estate Meetings

Local Marketing

2. Acquire A Real Estate Contract Template

Real estate assignment contract templates are readily available online. Although it’s tempting to go the DIY route, it’s generally advisable to let a lawyer see it first. This way, you will have the comfort of knowing you are doing it right, and that you have counsel in case of any legal problems along the way.

One of the things proper wholesale real estate contracts add is the phrase “and/or assigns” next to your name. This clause will give you the authority to sell the property or assign the property to another buyer.

You do need to disclose this to the seller and explain the clause if needed. Assure them that they will still get the amount you both agreed upon, but it gives you deal flexibility down the road.

3. Submit The Contract

Depending on your state’s laws, you need to submit your real estate assignment contract to a title company, or a closing attorney, for a title search. These are independent parties that look into the history of a property, seeing that there are no liens attached to the title. They then sign off on the validity of the contract.

4. Assign The Contract

Finding your buyer, similar to finding a seller, requires proper segmentation. When searching for buyers, investors should exercise several avenues, including online marketing, listing websites, or networking groups. In the real estate industry, this process is called building a buyer’s list, and it is a crucial step to finding success in assigning contracts.

Once you have found a buyer (hopefully from your ever-growing buyer’s list), ensure your contract includes language that covers earnest money to be paid upfront. This grants you protection against a possible breach of contract. This also assures you that you will profit, whether the transaction closes or not, as earnest money is non-refundable. How much it is depends on you, as long as it is properly justified.

5. Collect The Fee

Your profit from a deal of this kind comes from both your assignment fee, as well as the difference between the agreed-upon value and how much you sell it to the buyer. If you and the seller decide you will buy the property for $75,000 and sell it for $80,000 to the buyer, you profit $5,000. The deal is closed once the buyer pays the full $80,000.

Assignment of Contract Pros

For many investors, the most attractive benefit of an assignment of contract is the ability to profit without ever purchasing a property. This is often what attracts people to start wholesaling, as it allows many to learn the ropes of real estate with relatively low stakes. An assignment fee can either be determined as a percentage of the purchase price or as a set amount determined by the wholesaler. A standard fee is around $5,000 per contract.

The profit potential is not the only positive associated with an assignment of contract. Investors also benefit from not being added to the title chain, which can greatly reduce the costs and timeline associated with a deal. This benefit can even transfer to the seller and end buyer, as they get to avoid paying a real estate agent fee by opting for an assignment of contract. Compared to a double close (another popular wholesaling strategy), investors can avoid two sets of closing costs. All of these pros can positively impact an investor’s bottom line, making this a highly desirable exit strategy.

Assignment of Contract Cons

Although there are numerous perks to an assignment of contract, there are a few downsides to be aware of before searching for your first wholesale deal. Namely, working with buyers and sellers who may not be familiar with wholesaling can be challenging. Investors need to be prepared to familiarize newcomers with the process and be ready to answer any questions. Occasionally, sellers will purposely not accept an assignment of contract situation. Investors should occasionally expect this, as to not get discouraged.

Another obstacle wholesalers may face when working with an assignment of contract is in cases where the end buyer wants to back out. This can happen if the buyer is not comfortable paying the assignment fee, or if they don’t have owner’s rights until the contract is fully assigned. The best way to protect yourself from situations like this is to form a reliable buyer’s list and be upfront with all of the information. It is always recommended to develop a solid contract as well.

Know that not all properties can be wholesaled, for example HUD houses. In these cases, there are often anti-assigned clauses preventing wholesalers from getting involved. Make sure you know how to identify these properties so you don’t waste your time. Keep in mind that while there are cons to this real estate exit strategy, the right preparation can help investors avoid any big challenges.

Assignment of Contract Template

If you decide to pursue a career wholesaling real estate, then you’ll want the tools that will make your life as easy as possible. The good news is that there are plenty of real estate tools and templates at your disposal so that you don’t have to reinvent the wheel! For instance, here is an assignment of contract template that you can use when you strike your first deal.

As with any part of the real estate investing trade, no single aspect will lead to success. However, understanding how a real estate assignment of contract works is vital for this business. When you comprehend the many layers of how contracts are assigned—and how wholesaling works from beginning to end—you’ll be a more informed, educated, and successful investor.

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What is a Condo Assignment Sale? — Everything You Need to Know

What is a condo assignment sale, when does it occur.

Condo assignment sales occur before the final occupancy or closing date of a new construction property. An assignment sale occurs before the final closing of the property between the original purchaser (Assignor) and the builder.

As a new purchaser of an agreement, you are going to assume everything that the original purchaser agreed to in their original contract. For this reason, it is important to appoint a lawyer by your side to go over two important set of agreements. The first one is the agreement between the original purchaser and the builder. Lawyer will walk you over red flags or things like closing costs associated to the unit – remember you have to assume these terms. The second piece of agreement the lawyer will look at is the new agreement between the original purchaser (Assignor) and the new purchaser (Assignee)

Reason for a Condo Assignment Sale

Assignment sales take place with all sort of new construction product such as townhomes, detached homes, condos, stacked townhomes & more. Why do these kinds of sales happen? The most common reason is the original buyer’s circumstances might change and present a reason to list their condo for assignment sale transactions.

There are many reasons why one would decide to sell their unit on assignment since the gap of purchase time to occupancy is wide and can take 2-7 years depending on what type of property it is. Perhaps they will welcome a new member of their family soon and the condo just isn’t big enough for everyone. Whatever the reason, it isn’t always negative. It is important to work with professionals that can guide you throughout the process of an assignment sale.

Costs of Condo Assignment Sales

Is selling an assignment better than a regular real estate transaction? Yes. Being the seller (assignor) is known to contain more tax fees than a unit that is already built and you’ve taken title of. As a buyer of an assignment, you do not need to observe such fees and a professional can walk you over your closing costs associated to the transaction.

Now that you know what is a condo assignment sale, you can therefore make an informed decision. We get a lot of questions about new condos and whether it’s better to wait or to list them for assignments right away.

An assignment is better if you’re looking to get your money back sooner rather than later. Assignments will also see that the assignee pays the land transfer taxes and other taxes. Sometimes you can even make a profit on the market value if condo assignments are listed during a real estate boom.

It all sounds great, but selling condo assignments also has its drawbacks. For example, experienced real estate agents know it’s more difficult to sell an assignment property due to a much smaller buyer pool. Most assignment sales cannot be advertised online on platforms such as MLS.

In most cases,, there are marketing limitations when it comes to selling an assignment which can hurt your chances of finding a potential buyer

If you are looking for a new home sooner rather than later, an assignment sale offers closer occupancy dates, unlike purchasing something new that will only be ready in 5 years. In some cases, you may still have a chance to choose your own colours and finishes of the unit

Pros and Cons of Condo Assignment Sales for Buyers

As a buyers, you can expect to see advantages such as more options when choices are low. Since assignments are more complex, you typically face less competition on deals whereas in a hot market you may be in a bidding war scenario.

Pros and Cons of Condo Assignment Sales for Sellers

The pros for assignment sellers are a shorter list compared to the ones for buyers. First of all, sellers can get their money faster and put that amount to good use such as reinvestment. Sellers will not be responsible for carrying costs such as occupancy fees or go ahead with the mortgage payments or other closing fees.

At times, the seller can also play the market and list the unit for higher than the original purchase price and make a profit. However, more often than not, sellers will have a harder time seeing offers due to marketing restrictions and a smaller buyer pool.

Since the process for assignments is also much more intricate, it will be difficult to find a real estate professional out there that is familiar with this type of sale. For this reason, an assignment transaction can come with more complexity and would require additional knowledge.

Now that you know what is a condo assignment sale, you can decide if it’s the route you want to take as a buyer or seller. There are more advantages from a buyer’s standpoint, but there are undeniable pros for sellers such as getting your money back faster and avoiding closing costs.

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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 may be given an assignment clause in your original Agreement of Purchase and Sale (APS). This is key. This clause gives you the ability to sell the rights to your unit before the condominium is even registered.

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, and how you can benefit from this unique transaction as an investor. 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, is it worth it to buy an assignment.

Is it a Good Idea to Sell An Assignment

Assignments FAQ

The Details of an Assignment Sale

Assignment sales is not a new strategy in Canada, particularly assignment sales in Toronto. However, compared with other countries where condos have been around much longer, the process of assigning a condo in Ontario 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 maximizing their profits.

Why do pre-construction assignment 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.

Pre-Construction Purchase

In 2017, John Smith bought a pre-construction condominium unit from ABC Developments for $400,000 with a total down payment of 20%, equalling $80,000. He signed the original Agreement of Purchase and Sale (APS), and the project is set to be completed in 2024.

Original Buyer Needs to Relocate

In 2023, John discovers he will be relocated to a new city for his job. He can't afford to buy a new home while holding onto his pre-construction condo unit.

Original Buyer Becomes an Assignor

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

Assignee Buys the Rights to the Unit

John contacts an experienced pre-construction sales agent who networks on his behalf to find an interested buyer (an assignee). His agent finds Jane Doe, who wants a great deal on a new condo and decides to buy the rights to John's unit. As the assignee, Jane decides to make the purchase and agrees to perform all of the assignor's obligations outlined in the original APS. 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.

Assignee Moves In

In 2024 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.

The advantages for buying Assignment Sale

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.

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.

Is It a Good Idea to Sell An Assignment?

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. If you find you want to sell your unit before its closing date, assigning it can be a great choice. This can help you save money and avoid paying 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.
Gain a Profit: In a seller's market, you may be able to sell the rights to your unit at a higher price than you bought it, gaining a profit. This is like 'condo flipping'. In the right real estate environment, assigning your unit can be a lucrative financial move.
No Carrying Costs: By passing the right to your unit to someone else, you can avoid paying monthly occupancy fees to the developer that can sometimes last up to two years.
No Closing Costs: You don’t need to take out a mortgage or incur any other closing costs.

Register With GTA-Homes to Learn More

Our team of Platinum Agents is very well-versed in assignment sales and can help you make the most of your investment. Whether you are interested in buying or selling an assignment, we can help you follow the right track for the best possible outcome. There are excellent opportunities to be had now in the GTA. With a Platinum Agent, you can find 'hidden deals' that may not be advertised elsewhere. You can also gain access to eager buyers as a seller and get ahead. Register below and let us connect you with the best advice.

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 are interested in either buying or selling a pre-construction condo assignment, working with a realtor who is experienced in finding, negotiating and drawing up an offer for these types of sales can be invaluable. You’ve come to the right place! At GTA-Homes, we have a wealth of expertise, knowledge and resources when it comes to assignment sales. We would be more than happy to assist you in finding an excellent opportunity in the GTA for a prosperous future. Register now to connect with our award-winning team.

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Assignment Sale

An assignment sale in the pre-construction market.

A contract to buy a pre-construction condo suite is sold in an assignment sale, or it is “assigned,” to another party. Since the pre-construction condominium has not yet been registered, an assignment sale is typically used to prevent anyone from purchasing the actual unit. The contract itself cannot be sold.

You will receive an assignment clause or right in the form of a contract when you buy a pre-construction condominium unit. Before the condominium is even finished, you can decide to sell your assignment.

No property is being purchased by Assignee/Buyer from Assignor – A third party is selling the assignee the “right” to purchase their property (usually a builder)
In the Original Agreement with the Builder, Assignor transfers its rights and interests (or original seller)
Assignee “assumes” and undertakes to carry out all of the Assignor’s responsibilities under the Initial Agreement as the Assignor’s interest in the original “deposit” is assigned by the Assignor to the Assignee.

The ownership will be given to the buyer once the building has been constructed and registered by the city. Until, it is merely the sale of a contract, but as you shall see, both the buyer and the seller benefit greatly from these deals.

Learn more about assignment sales in this article, including their uses, how they work, and how they may be transferred.

This will enable you to decide if an assignment sale is the best option for you.

What Is An Assignment Sale? Why Do These Kinds Of Sales Happen?

Assignment sale is selling your unit’s rights before it is constructed. There are a variety of reasons why someone might sale an assignment. For instance, someone might have purchased a suite that won’t be finished for three years, but they recently had to move for work. To buy a home in their new city, the buyer might have to sell their contract.

Another typical explanation is that a buyer started the purchasing process while still single but got married or learned they were expecting a child during the pre-construction phase. They have recently learned that the one-bedroom pre-construction suite they purchased is insufficient for a growing family.

When this occurs, the “assignment clause” in the purchase agreement is essential. It enables the first purchaser to transfer the contract to another party without incurring financial penalties.

However, whether you are the buyer or the seller, it’s crucial to engage with both an experienced realtor and lawyer who know how to safeguard your interests. These types of transactions are popular and completely legal.

The developer, the assignor, and the assignee are all parties to these arrangements, which are more complicated than a typical resale. Interim occupancy and the final closing are both parts of the two-stage procedure.

An Example Of An Assignment Sale

A simple assignment agreement would only include this. Additional information is provided regarding the mortgage rules and other contract specifics. This is just an overview; each arrangement is distinct and has its own set of guidelines, terms, and conditions.

We suggest that anyone considering buying or selling a pre-construction assignment consult with a real estate agent, real estate lawyer , and tax accountant. Making contact with a lawyer is crucial since assignors can be responsible for paying a sizable tax on any gains they obtained from the completed transaction.

A pre-construction condominium suite was purchased by John Smith from ABC Developments in 2017 for $400,000 with a total down payment of 20%, or $80,000. In 2022, the project is expected to be finished.

John learned that he would be transferred to a different city in 2021. He's holding onto his condo under construction since he can't afford to buy a new house.

Fortunately for John, the assignment clause permits him to sell his unit's contract before the building is finished and registered!

John has decided to sell his unit's contract to Jane Doe. He was able to sell the contract for $500,000 as a result of market changes. Assignment Purchase: Assignment Agreement: $500,000 Original Purchaser (Assignor) = John Smith New Purchaser (Assignee) = Jane Doe Vendor (Builder) = ABC Developments John Smith's assignment purchase price to Jane Doe is $180,000, which is due immediately. The deposit is $80,000, and the profit is $100,000. This payment's amount and timing are also negotiable.

Jane Doe will occupy the unit for the tenancy period beginning in 2022 when the building is finished and available for interim occupancy. She will now start paying the developer occupancy fees. Until the building can be registered, these fees serve as a substitute for condo and mortgage payments. When a property is declared safe to reside in by the city, interim occupancy occurs. After the municipality conducts a final inspection, the building will be legally registered. Jane Doe can stay in her suite until the building is formally registered.

Assignment Specifics: When the building is legally registered by the city, the developer and the new purchaser transfer official title. Finally, Jane Doe can sign a mortgage document and begin making mortgage and condo payments. Jane Doe's required funds to finalize the transaction to the builder = $320,000 As a current owner, Jane Doe is entitled to all property rights. Any resale of the property in the future will be treated like any other real estate deal.

Is It Worth It to Buy an Assignment?

Because fewer individuals seek out these types of transactions, assignment acquisitions can provide some of the finest discounts in the GTA condo market. In addition to having fewer purchasers, many real estate agents are unfamiliar with the assignment sale’s format and frequently choose not to market these listings. Even lawyers might not be familiar with all the details of an assignment sale.

Due to the high demand in the resale market, buyers may be forced into competitive bidding situations where they may overpay for their suite. When you purchase a contract through assignment, you have the chance to avoid intense competition and frequently pay significantly less than you would for a resale unit.

Both the buyer and the seller may benefit from the assignment condo market. The buyer can save time and possibly thousands of dollars by not having to wait for the building to be finished before listing their property.

Another benefit of purchasing an assignment agreement is that you will receive a brand-new unit that is already covered by the Tarion Warranty Program, which has a seven-year duration. Not to mention that you won’t have to wait the customary 3 to 4 years for the building to be finished and will probably be able to move into the unit sooner!

Here Are a Few Benefits For Buyers to Review:

Options: When there aren’t enough listings on the market, there are more options.
Less competition: These kinds of listings are looked at by fewer people.
Peace of Mind: There is less of a chance for a bidding battle when fewer people are seeing these sales. Bidding wars and spending more money than you can afford only to outbid another buyer can be avoided.
You Become A VIP: You are likely to inherit builder-provided VIP benefits like the seven-year Tarion Warranty Program and other benefits including credits, upgrades, developing cost caps, and more.
More Choices: You could still be able to choose your own finishes, colors, and upgrades depending on how far along construction is.
Negotiate: Sellers typically have to sell in order to release their equity. You may be able to negotiate prices, deposits, and closing dates with this.
Brand-new Condo: Instead of waiting 2 to 3 years like in a traditional pre-construction contract, you will receive your unit much sooner. The occupancy date is frequently just a few months away.
Taxes: Saving money on taxes like GST and HST may also be advantageous to you.

Selling an Assignment

In the past, owners who wanted to sell their pre-construction condos had to hold off on listing their condo for sale until the final closing date, which may take months or years. They might have already invested a sizable sum of money in closing costs and occupancy fees by this time.

Although assignment sales are not a new technique in Canada, when compared to other nations where condos have been around for far longer, the process is not always fully understood by sellers, buyers, agents, lawyers, and even lenders. By learning about assignments, sellers have been saving time and increasing their revenues, which has been rewarding.

The popularity of these transactions is rising. Consider it similar to condo flipping. In order to get their deposits back, sellers who transfer their property rights before or during interim occupancy can avoid incurring significant carrying and closing charges.

The majority of builders allow assignment sales, however they frequently have requirements that must be followed. There are still options open to you despite the strict rules in place.

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

Re-invest: You can withdraw your equity and reinvest in other projects.
No Carrying Costs: Paying monthly expenses, such as occupancy fees, which can occasionally extend up to two years, is avoidable.
No Closing Costs: There is no requirement for you to obtain a mortgage or pay any other closing fees.
Play The Market: Profit from the rising condo market by selling the unit before it is completed and investing the proceeds back into another project. It is a major contributor to Toronto’s economy and is still growing.

Assignments Frequently Asked Questions

It is the sale of a contract to buy a unit that is still under construction. In other words, the contract or right to purchase the property after it is finished is being sold, not a unit that has already been completed. The initial buyer of a property (the “assignor”) transfers their contractual duties to a subsequent buyer (the “assignee”). In general, the assignee will take on all of the assignor’s responsibilities, including paying taxes, interest, and maintenance fees while the property is in transitional occupancy. Upon completion, the assignee receives the real estate’s title and is responsible for paying all closing costs.

It is allowed unless expressly banned in the original buy and selling agreement. In some circumstances, the assignor may be charged a fee by the developer for this form of sale.

It depends. For more information, refer to your purchase agreement. Developers typically won’t allow an assignment sale without their consent, so you’ll need to speak with them and a lawyer. There have been incidents where an unauthorized assignment sale led to the cancellation of the initial agreement and the preservation of the deposit!

If you are looking for an assignment sale network or premium platform to display, locate and access assignment sales and assignable preconstruction projects, place them with confidence, effectiveness, privacy, and security, try Assign Circle. Contact us or check our assignment sale packages for more information.

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Assignment sales 101

In a market where resale properties get snapped up in a matter of hours and pre-construction projects sell out in a few days, buying can be a challenge. There’s a lot of competition out there, and some buyers have been looking at assignment sales as an additional source of available properties.

What is an assignment sale, exactly?

An assignment is when the original buyer of a pre-construction property (who signed a contract with the builder) sells their contract to someone else before the purchase closes. Essentially, the buyer takes over for the seller in the contract and pays the deposit plus appreciated value/profit.

Assignments happen for a number of reasons. Life changes are a big motivator – a lot can happen in the three to four years it takes to get from initial deposit to ownership. People decide to leave Toronto. They have babies, they get married, they get divorced. Some face financial difficulties that make them unable to close.

Or, in the most common scenario, they’re investors who never intended to close on the property in the first place. A popular investment strategy is to buy in an early release, let the property appreciate, then sell it before having to shell out transfer taxes and HST and getting locked into a mortgage.

Read more: Is pre-construction still a good investment?

The pros and cons of assignment sales

This type of transaction comes with a very specific set of pros and cons for both the buyer and the seller. Here’s a quick rundown:

You can own a brand new unit without waiting years for it to be finished – buying directly from a builder involves a much longer wait.

There can be less competition. Typically, they aren’t marketed the same way as resales and fewer buyers know about them. The complexity of the transactions shrinks the potential buyer pool even further.

You don't have to worry about a project being cancelled and leaving you in the lurch: most builders don’t allow assignments until the project is almost done.

You need to have a a good chunk of cash, including all deposits that have been paid to the builder, agent commission, municipal charges, Tarion warranty, closing costs and the assignment fee, which can vary from a few hundred dollars to a few thousand (though some builders waive it as a purchase incentive). And you’ll be paying the appreciated price – not the amount the original buyer paid.

An assignment sale is a lot more complicated than a resale purchase. You need a real estate lawyer experienced in assignments to ensure everything is done right, and a realtor who really understands the assignment market.

Seller pros

If you’re an investor, you can cash in on the profits before the project is completed. Getting cash out earlier means you can reinvest faster.

You avoid paying land transfer taxes, HST and a whole lot of other closing costs.

You don’t have to deal with closing, occupancy, or tenants.

If your life situation changes, it allows you to walk away without penalties (and some profit).

Seller cons

It’s harder to sell an assignment than a resale: the rules around marketing are different than for resales, so the pool of buyers is smaller.

There are limits around when you can sell: a certain percentage of the development has to be sold before a developer will allow it.

Not all builders allow assignments, and even if they do, they can refuse the sale.

The builder could cancel incentives like capping of development charges and design/upgrade credits, which increases the price and cuts into profit.

Greater complexity means higher legal fees.

An experienced agent is a must-have

REALTORS® who understand assignments can help you navigate the complexity of this type of transaction. And they can help you market it, despite any limitations that might be imposed by the builder: they can leverage their networks to spread the word about available units, find interested buyers and connect the two.

“Agents can source assignments through a mixture of Kijiji ads, personal networks and semi-private networks like Facebook groups who screen their members,” says Konrad Gloge, Sales Representative. “Builders have the power here: if you list an assignment on MLS and they haven't agreed to it, you’ll be in breach of contract and you could lose your deposit, which is a pretty compelling incentive not to list. That’s why working with a well-connected agent is a must.”

Assignments can be daunting, but with a good lawyer and a knowledgeable realtor, they can be a great financial move, helping you profit on your purchase before it closes or get into a great new place faster.

Could an assignment sale be your best way into home ownership?

Ask a property.ca agent – they’ll be happy to help you figure out your best strategy..

Condo Assignment sales Explained

Condo assignments in bc’s presale market.

Updated by Mike Stewart Vancouver Realtor on January 27, 2024

Across Vancouver and British Columbia, condo assignments remain a popular topic regardless of market conditions

This article will delve into the intricacies of selling a presale condo in BC through assignments of contract, providing a comprehensive guide for potential sellers and buyers.

What is as Presale Condo Assignment of Contract?

A presale condo assignment sale is a transaction in which the original buyer of a presale condo—a property not yet constructed—transfers their rights and responsibilities under the purchase agreement to a new buyer before completion.

This assignment of contract is a strategic move that, despite its complexity, offers a potential financial advantage for both parties involved and should only be done with professional advice.

Essentially, it allows the new buyer to assume the original buyer’s position in the agreement with the developer, selling their interest in the property before it’s built.

Key Terms to Understand

The transactions have their own specific jargon that can be very confusing to the uninitiated.

Here is a list of terms that will make it easier to understand presale condo assignment sales.

Assignor – this is the original presale condo buyer who purchased the unit from the developer.
Assignee – this is the purchaser of the assignment from the assignor.

Before we discuss how to sell or assign a preconstruction condo in detail, we need to clarify what a presale is.

Looking for Presale Condo Assignments for Sale in Vancouver?

Check out the assignments for sale Vancouver that we have exclusively available!

What is a Presale Condo?

A presale condo is a property unit that is sold to buyers before the building has been fully constructed.

Developers in BC often pre-sell condos and townhouses to secure necessary funding for their projects.

Buyers are essentially purchasing a promise that a condo will be built to certain specifications at a future date.

Step-by-Step Process of a Condo Assignment Sale

Below is a step-by-step explanation of how a presale condo assignment sale works from start to finish. Should you have any questions, feel free to reach out to me at 604-763-3136.

Developer’s Assignment Policy Check : Before anything else, the assignor’s real estate agent should verify if the developer permits assignments. It’s also essential to determine whether the developer allows the public marketing of the assignment.
Marketing the Assignment : Once permissions are confirmed, the assignor’s Realtor will market the property. Depending on the region and developer’s policies, this could be on the MLS or through other channels. For instance, in the Lower Mainland, many developers near Vancouver prohibit MLS listings for assignments , but it’s more common in places like the Fraser Valley.
Receiving and Reviewing Offers : When a potential assignee shows interest, their Realtor will prepare and submit an offer to the assignor’s Realtor. The assignor and their agent will then review this offer, potentially leading to negotiations.
Securing an Accepted Offer : After negotiations, if both parties agree on terms, they’ll have an accepted offer in place. This doesn’t mean the sale is complete, but it’s a significant step forward.
Developer Approval : With an accepted offer, the assignor’s Realtor must submit it to the developer for review. Developers usually have a dedicated team or work with a project marketing company to review these offers. They’ll assess the assignment and present it to the developer for final approval. This step often involves paying an assignment fee to the developer. More on this below.
The assignor pays the developer any required assignment fees. More on this below.
The assignee reimburses the assignor for their initial deposits.
The deposits that the assignor originally gave to the developer are then transferred to the assignee.
After this occurs, there usually is wait before completion of the property occurs.
Completion of the Sale : The assignee, now stepping into the shoes of the original buyer, will finalize the property’s purchase. Once the development is complete, they’ll become the official owner of the condo or townhouse.
Understanding Assignment Fees : It’s crucial for both parties to be aware of any assignment fees. These fees, charged by the developer, can range significantly. They’re typically outlined in the original presale purchase contract and need to be settled before the developer approves the assignment sale.

For more details on this process, please see our post on How to Sell a Presale Condo Assignment in BC .

Condo Assignment Contracts Require Developer Permission

Condo assignments of contract are unique in that the permission of the original developer is required in writing in order for the transaction to go forward.

As mentioned above, condo assignment purchase contracts are essentially 3 way contracts that require the written consent of the assignor (original purchaser), the assignee (new buyer), and the developer.

The developer is not required to give permission and it will state that the developer can withhold permission of an assignment for any reason.

In practice, developers often do not permit assignments or may stop allowing assignment sales and marketing unexpectedly.

The key is to work with a Realtor who knows assignment sales who has the connections and ability to find out the developers current views on allowing assignments in their projects.

We can help with this as we sell assignments regularly and have deep long term connections relationships with all of the major developers and marketing companies in BC.

What is an Assignment Fee in BC?

An assignment fee is a sum of money developers charge to allow an assignment of contract to go forward.

Developers typically charge an assignment fee of anywhere from a few dollars up to 5-10% of the assignment purchase price.

Payment of the assignment fee is required before a developer will sign the assignment sale contract.

The amount the developer charges for an assignment is typically laid out in the presale purchase contract.

The assignment fee needs to be paid to the developer when the developer gives permission to allow the assignment of contract to go forward.

Developers will often allow lower assignment fees for assignments that happen between immediate family members.

Who Pays Assignment Fees?

Assignment fees are typically paid by the assignor to the developer. The assignment fee sometimes can be paid by the assignee if the assignor agrees to it in the contract or the assignor is not able to pay fee.

Please note who pays the assignment fee is negotiable in the negotiations between the assignee and assignor before there is an accepted offer.

When are Assignment Fees Paid?

Assignment fees are paid once the assignee and assignor have an accepted offer and the assignee has removed their subject conditions on the contract of purchase of sale.

The assignment fees is only payable if the developer gives permission for the assignments. If the developer does not give permission to the assignment, the assignment fee is not payable.

Condo Assignment Deposits Explained

Once the developer gives permission for the assignment sale in writing, the assignee (assignment buyer) will reimburse the assignor (seller of the presale/original buyer) for the original deposits paid to the developer by the original buyer (assignor/seller of the presale).

The deposits held by the developer will have their ownership transferred or “assigned” from the assignor (original presale buyer/seller) to the assignee (assignment buyer).

How are Condo Assignment Deposits Held?

Assignment sale deposits are typically paid into by assignee’s buyers agents trust account once the assignee removes subjects on their assignment purchase contract.

Here are two options for the funds that an assignee reimburses an assignor for their original deposits held by the developer:

Released to the assignor upon receiving written permission from the developer for the assignment making the assignment contract firm and binding on all parties.
Held in a trust account to be released to the assignor upon completion of preconstruction property.

Why Assign a Presale Condo?

There are several reasons why an original buyer might want to sell their presale condo.

Market conditions may have changed, making it profitable to sell the contract for a higher price than the original purchase price.

Alternatively, the original buyer’s personal circumstances may have changed, making it difficult or undesirable to complete the original purchase.

Legal Framework for Assignments in BC

In BC, the Real Estate Development Marketing Act (REDMA) governs the sale of presale condos and assignments of contract.

Under REDMA, developers must provide a disclosure statement to presale condo buyers that includes information about the developer, the development, and the rights and obligations of the parties.

This includes the buyer’s right to assign the contract and any restrictions or requirements the developer may have regarding assignments.

When buying a presale condo assignment, it is imperative that the purchaser receives and reviews the disclosure statement and all of the amendments to the disclosure among other documents to make an informed decision about a purchase.

Condo Assignment Risks

Presale condo assignments are extremely complex transactions.

The considerable risks of assignments can be avoided by hiring a qualified Realtor, tax accountant, and real estate lawyer.

Below is an explanation of the risks for both assignors and assignees in an assignment sale.

Risks for Assignors:

Even if the original purchase agreement allows for assignments, the developer can withhold permission. If the assignor has already made plans based on the assumption of selling the assignment, this can lead to significant disruptions.
If the assignee defaults or fails to complete the purchase, the assignor might be left to complete the original purchase. If the assignor’s circumstances have changed, they might not be prepared or financially capable of doing so.
In BC, a presale condo might get cancelled due to unforeseen construction challenges, financial difficulties faced by the developer, changes in market conditions, failure to secure necessary permits, or legal disputes. Though project cancellations rare, it can happen and an assignor may face legal action from assignee who has paid a premium to the assignor for a condo that does not get delivered.
The Canada Revenue Agency (CRA) might view the sale as a business transaction rather than a capital gains transaction, leading to a higher tax liability for the assignor. Check in with a qualified tax accountant before thinking of selling a presale condo in BC.
If an assignor frequently engages in assignment sales, they might develop a reputation with developers. This could impact their ability to purchase presale condos in the future, especially if developers view them as speculators.

Risks for Assignees:

Since the property isn’t built yet, the assignee is buying based on plans and promises. The final product might differ from initial plans, leading to dissatisfaction.
If the real estate market declines after agreeing to the assignment purchase, the assignee might end up paying more than the market value by the time the condo is completed.
Securing financing for assignment sales can be more challenging than for traditional real estate purchases. Some lenders might be unfamiliar with or wary of the complexities of assignment sales.
The assignee might be unaware of additional costs or changes made by the developer after the original purchase agreement. This can lead to unexpected financial burdens.
If the assignor doesn’t provide all necessary disclosures or if there are discrepancies in the assignment agreement, the assignee might face legal challenges or complications.
In BC, a presale condo might get cancelled due to unforeseen construction challenges, financial difficulties faced by the developer, changes in market conditions, failure to secure necessary permits, or legal disputes. Though project cancellations rare, it can happen and an assignee who has paid a premium to the assignor may not get a condo.

Presale Condo Assignment Sales FAQ

A condo assignment is the legal transfer where the original buyer (assignor) of a presale condo sells their contractual rights and obligations to another buyer (assignee) before the property’s completion.
Unlike a regular condo sale where the property is already built and ownership is transferred, a condo assignment involves selling the contractual rights to a condo that hasn’t been constructed yet. Essentially, it’s the transfer of a promise for a future property.
There are various motivations. Market conditions might make it profitable to sell the contract at a higher price than the original purchase. Alternatively, the original buyer’s personal circumstances might change, making it challenging or undesirable to complete the original purchase.
Yes, in BC, the Real Estate Development Marketing Act (REDMA) oversees the sale of presale condos and condo assignments. It ensures buyers are informed about their rights, the developer, and the development.
Absolutely. The original developer’s written permission is essential for a condo assignment. It’s worth noting that developers can withhold this permission for various reasons.
An assignment fee is a charge set by developers, which can range from a nominal amount to up to 5-10% of the assignment purchase price. This fee must be paid before the developer approves the condo assignment sale.
After the developer approves the condo assignment in writing, the assignee reimburses the assignor for the initial deposits made to the developer. The ownership of these deposits then transfers to the assignee.
Highly recommended. A Realtor with condo assignment expertise will offer invaluable insights and connections, ensuring a more streamlined process for all involved.
Yes, developers’ views on allowing condo assignments can change. They might halt assignment sales or marketing without notice, emphasizing the importance of staying informed and working with knowledgeable professionals.
Before entering a condo assignment agreement, what should I consider?
It’s essential to grasp the legal and financial implications, seek advice from a real estate professional, and acquaint yourself with the Real Estate Development Marketing Act (REDMA). Proper research, understanding, and expert guidance are pivotal for a successful condo assignment transaction.
Who typically pays the Assignment Fee?
The assignor usually covers the assignment fee to the developer. However, in certain situations, especially if the assignor faces financial challenges, the assignee might bear this cost.

12. Are Presale Condo Assignment Legal?

Yes. Presale condo contract assignments are legal, despite some less informed politicians ruminating on potentially banning them.

Pro Tips for Navigating Condo Assignments

Before entering into an assignment agreement, thoroughly review the original purchase contract and presale disclosure statement. Look for any clauses or restrictions related to assignments to ensure you’re not breaching the agreement. The disclosure statement is designed to allow a buyer (either assignee or assignor) make an informed decision about a purchase. Read and understand it.
Work with a Realtor experienced in condo assignments. They’ll have insights and connections that can be invaluable. Additionally, consult with a real estate lawyer to ensure all legalities are addressed.
Understand the reputation of the condo’s developer. A reputable developer is less likely to cancel a project or deny assignment requests without valid reasons.
Be aware of the assignment fees charged by developers. These can vary and might impact the profitability of the assignment. This can also have an impact on the negotiating strategy if the assignment fee is quite high or low.
The real estate market can be volatile. Regularly assess market conditions to determine the best timing for an assignment sale.
Ensure open communication lines with both the assignee and the developer. Misunderstandings can lead to complications or lost opportunities.
Keep a record of all communications, agreements, and transactions related to the assignment. This can be crucial if disputes arise.
Consult with a tax professional to understand before doing anything to understand any potential tax liabilities or benefits arising from the assignment sale or purchase.
Plan for Financing Challenges:
If you’re an assignee, understand that not all lenders are familiar with assignment sales. It might be more challenging to secure financing, so start this process early.
Stay Informed on Legal Regulations:
Familiarize yourself with the Real Estate Development Marketing Act (REDMA) and any other local regulations governing assignments in your area.

By following these pro tips, both assignors and assignees can navigate the complex world of condo assignments with greater confidence and success.

Benefits of Condo Assignments

Condo assignments offer a range of advantages for various parties involved, from the original buyer to the new buyer and even the developer. Here’s a breakdown of the benefits:

Flexibility for Original Buyers : Life is unpredictable. Financial situations, job relocations, or changes in family dynamics can alter one’s ability or desire to complete a presale condo purchase. Assignments provide an exit strategy for original buyers who no longer wish to, or cannot, finalize the purchase.
Potential for Profit : If the real estate market has appreciated since the original purchase, the original buyer (assignor) might sell the assignment for more than their initial purchase price, earning a profit before the condo is even completed.
Opportunity for New Buyers : Assignments can be a golden opportunity for new buyers (assignees) to step into a contract at potentially below current market prices. They might also get access to units in sold-out developments or in prime locations that are no longer available directly from the developer.
Avoiding Marketing and Sales Costs : For developers, allowing assignments can mean that they don’t have to re-market and sell a unit if the original buyer backs out, saving them potential additional costs.
Immediate Access to New Developments : New buyers can gain access to developments that are closer to completion, reducing the waiting time compared to buying a new presale.
Financial Liquidity for Original Buyers : By selling their rights through an assignment, the original buyer can free up any deposits or funds tied to the presale condo, aiding their financial liquidity.
Reduced Risk of Project Cancellation : New buyers stepping into assignments might do so in projects that are further along, thereby potentially reducing the risks associated with project delays or cancellations.

Understanding the benefits of condo assignments can help both original and new buyers make informed decisions, ensuring that they leverage the opportunities this unique real estate transaction offers.

Selling a presale condo in BC through an assignment of contract can be a complex process, but it can also be a profitable venture if done correctly. It allows the original buyer to potentially make a profit before the completion of the condo, and it provides an opportunity for another buyer to step into the original buyer’s shoes and benefit from any increase in the property’s value.

However, it’s important to understand the legal and financial implications of such a transaction. The Real Estate Development Marketing Act (REDMA) provides a regulatory framework for these transactions, but it’s crucial to consult with a real estate and tax professional and a lawyer to navigate the process effectively.

In conclusion, selling a presale condo in BC through an assignment of contract is a unique aspect of the BC real estate market. It offers opportunities for profit and flexibility for buyers, but it also requires careful consideration and understanding of the process. As with any real estate transaction, due diligence, knowledge, and professional advice are key to success.

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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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How Do Assignment Sales Work

Share this:, june 25, 2021 | uncategorized.

Although assignment sales are not the most common type of real estate transaction, they do happen relatively often. They are especially common in cities with a lot of new developments, like Etobicoke . Assignment sales have many benefits for both buyers and sellers.

Although they can sometimes be complex, working with an experienced agent is the best way to ensure an assignment sales goes smoothly.

Since these transactions are more complex than a traditional real estate sale, we run into many client questions about assignment sales and how they work.

Here’s a guide to everything you need to know about assignment sales.

What is an assignment sale.

An assignment sale is when the original buyer of a home sells their property before closing on it.

When would this ever happen? In the world of pre-construction real estate, many new development homes are bought up before they even physically exist. For example, in many new condo building developments, the construction doesn’t even break ground until about 70% of the units are already sold.

There are many different roles in this type of assignment sale including the developer, assignor, and assignee. Let’s break down each role:

Who Is The Developer?

When it comes to pre-construction real estate projects, developers pretty much run the show. From identifying the site of new developments and brokering financing deals, to hiring the architects and builders to oversee the entire process, developers are the masterminds behind every new construction project. They often play an important role in an assignment sale.

Who Is The Assignor?

The assignor is the original buyer of the pre-construction property . The ‘assignor’ could be an individual or a business entity. For example, a real estate investment company, a private investor, or a regular home buyer. Pre-construction real estate developments usually attract a lot of interest from a diverse cast of buyers—even if the properties aren’t move-in ready.

It might be hard to consider buying a home that doesn’t actually exist yet. You’re basically buying an idea. However, there are advantages of ‘getting in early.” Some of the biggest benefits of buying pre-construction include:

Price : Pre-construction units usually cost less. There are greater risks involved and the units haven’t changed hands through re-sale yet.
Appreciation : The unit may increase in value between the time it’s purchased to when it’s move-in ready through normal market growth.

Who Is The Assignee?

If an assignor wants to sell their interest (read: ownership) of their property unit before construction is complete, this would result in an assignment sale. The assignee is the new buyer of the assignor’s property. This is the person who will ultimately take the sale the whole way through to closing.

Do Assignment Sales Benefit Buyers or Sellers?

Assignment sales can be beneficial for both parties in a real estate transaction. Although the assignor takes on some risk in buying before the project breaks ground, they reap other benefits. For example, if the value of the property goes up in the interim, they can usually sell it for more than they paid.

For an assignee, they might spend a little more than the original price, but they are taking on less risk while still moving into a brand-new home.

Why Do Assignment Sales Happen?

An assignor might sell their property to an assignee for many reasons.

Their plans might have changed for one reason or another, making them unable to move into their pre-construction property. Or, they may feel it’s the right time to cash in on their investment should the value of their property have increased.

Whether you’re interested in learning more about assignment sales or just need some general advice about buying real estate, our team is here to help you. Book your personal home buying consultation here , or simply contact us here to get started.

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An assignment sale in the pre-construction market.

Assignment sales are a unique facet of the pre-construction real estate market, offering an alternative path for property transactions before a building is completed. This article delves into the intricacies of assignment sales, examining their role, process, and implications within the pre-construction market. By exploring the benefits and risks, financial aspects, and the current trends, we aim to provide a comprehensive understanding of how assignment sales function and their potential impact on buyers, sellers, and the real estate landscape.

Key Takeaways

Assignment sales allow original buyers to transfer their purchase rights to new buyers before the completion of a pre-construction property.

The process involves several steps, including legal considerations, marketing strategies, and the management of closing timelines and documentation.

These transactions offer benefits such as potential profit for sellers and early access to property for buyers, but also come with risks like market volatility and complex contract terms.

Financial implications include a unique cost structure with potential tax consequences, and buyers must often navigate limited financing options.

Market trends indicate that assignment sales are influenced by economic factors and regulatory changes, with future outlooks suggesting shifts in their prevalence and structure.

Understanding Assignment Sales

Definition and Basics of Assignment Sales

An assignment sale occurs when the original buyer of a pre-construction property sells their interest in that property before it is completed. Essentially, the original buyer, or assignor, transfers their contractual rights and obligations to a new buyer, known as the assignee. This type of transaction is particularly common in the pre-construction market for condominiums and new housing developments.

The key benefit of an assignment sale is the ability to transfer property ownership without waiting for the construction to complete. This can be advantageous for investors or buyers who need to liquidate their assets or who may have had a change in circumstances.

The assignor sells their contract to the assignee.

The assignee takes over the rights and obligations of the original purchase agreement.

The transaction typically requires the consent of the developer.

The Role of Assignment Sales in Pre-Construction

Assignment sales play a pivotal role in the pre-construction phase of real estate development. They offer a unique opportunity for original buyers to sell their purchase contract before the completion of the property. This can be particularly beneficial in a rapidly appreciating market, where the value of the property may have increased significantly since the initial sale.

The liquidity provided by assignment sales is essential for both developers and buyers. For developers, it ensures continuous cash flow and reduces financial risk by allowing original purchasers to transfer their obligations to new buyers. For buyers, it offers a chance to invest in real estate at a potentially lower price point and with more flexible terms than what might be available post-construction.

Flexibility is a key advantage of assignment sales, as they allow for changes in circumstances. Whether it's a change in financial situation, personal life, or simply a strategic investment decision, assignment sales provide an exit strategy for original buyers without the need to wait for the project's completion.

Assignment sales contribute to the dynamism of the pre-construction market, enabling a more fluid transfer of property rights and interests.

The following points highlight the role of assignment sales in pre-construction:

Facilitating early property rights transfer

Allowing original buyers to capitalize on market appreciation

Providing developers with a tool to manage cash flow and reduce risk

Offering buyers an alternative path to real estate investment

Enabling adaptability to changing market or personal conditions

Legal Considerations and Contracts

Navigating the legal landscape of assignment sales in the pre-construction market requires a thorough understanding of the contracts involved. The agreement between the original buyer and the assignee must be explicit in detailing the rights, obligations, and conditions of the sale. It's essential to ensure that the contract is compliant with local real estate laws and regulations.

Assignment contracts typically include clauses related to the original purchase agreement, the assignment fee, and any warranties or representations. Here are some key components that should be considered:

The original purchase agreement and its terms

The assignment fee and how it's structured

Representations and warranties by the assignor

Consent from the developer or builder

Closing adjustments and costs

It is crucial for both parties to seek legal advice before entering into an assignment agreement to prevent any future disputes or misunderstandings.

Failure to adhere to the legal requirements can result in penalties or the invalidation of the sale. Therefore, it is advisable to work with a real estate lawyer who specializes in pre-construction and assignment sales to navigate this complex process.

The Process of an Assignment Sale

Steps Involved in an Assignment Transaction

The assignment sale process in the pre-construction market involves several key steps that both the assignor (original buyer) and the assignee (new buyer) must navigate carefully. The first step is the consent of the developer , which is crucial as not all developers allow for assignments and their approval is typically required.

Next , the parties must agree on the terms of the sale, including the price and any conditions. This is followed by the preparation and signing of the assignment agreement, a legally binding document that transfers the original buyer's rights and obligations to the new buyer.

Identify a potential assignee

Obtain developer's consent

Negotiate terms and price

Draft and sign the assignment agreement

Fulfill any conditions precedent

Close the transaction and transfer ownership

It is essential for both parties to understand their rights and responsibilities as outlined in the assignment agreement to ensure a smooth transaction. Proper legal advice should be sought to navigate the complexities of the agreement and to protect the interests of both the assignor and the assignee.

Finding a Buyer: Marketing and Negotiation

Once the decision to pursue an assignment sale is made, the seller must embark on the journey of finding a suitable buyer . This process is critical and can be complex, involving strategic marketing and skilled negotiation. To effectively market an assignment sale, sellers should consider the following channels:

Online real estate platforms

Social media advertising

Real estate agent networks

Targeted email campaigns

Effective marketing is about understanding the target audience and tailoring the message to highlight the unique benefits of the pre-construction property.

During the negotiation phase, it's essential to be clear on the terms and conditions of the sale. The seller must be prepared to discuss the assignment fee , closing costs, and any other financial obligations. Negotiations can be a delicate balance between getting the best price and ensuring the sale moves forward. Remember, a successful negotiation results in a win-win situation for both parties involved.

Closing the Deal: Timelines and Documentation

Closing an assignment sale requires meticulous attention to detail and adherence to strict timelines. Documentation is key , as it provides proof of the agreement and outlines the responsibilities of each party. The closing process typically involves the following steps:

Review and finalize the assignment agreement.

Obtain necessary consents from the developer.

Secure financing and finalize mortgage details.

Conduct a title search and purchase title insurance.

Prepare and execute the closing documents.

It is crucial for both the assignor and assignee to understand the closing costs involved, which may include land transfer taxes, legal fees, and adjustments. A clear timeline should be established to ensure all parties are aware of their obligations and the deadlines.

The successful transfer of rights from the original purchaser to the assignee hinges on the thoroughness of the documentation and the ability to meet all contractual obligations within the agreed-upon timeframe.

Ensuring that all parties have a mutual understanding of the process and the associated deadlines can prevent any last-minute hurdles that could delay or jeopardize the sale.

Benefits and Risks of Assignment Sales

Advantages for Sellers and Buyers

Assignment sales offer unique benefits to both parties involved in the pre-construction market. For sellers, it provides an opportunity to liquidate their investment before the completion of the project, which can be particularly advantageous if their circumstances have changed or if the market conditions are favorable. Buyers benefit from potentially lower prices compared to the finished property market, as well as the chance to customize certain aspects of their future home.

Flexibility is a key advantage in assignment sales. Sellers can avoid the long wait and the carrying costs associated with the final stages of construction, while buyers can enter the real estate market without the typical bidding wars associated with completed properties.

Sellers' Advantages: Early exit from investment

Capitalization on market appreciation

No need to carry mortgage and maintenance costs

Buyers' Advantages: Lower entry price point

Customization options

Less competition

The synergy between the seller's desire to release capital and the buyer's search for value creates a dynamic market environment that can benefit all parties involved.

Potential Risks and How to Mitigate Them

While assignment sales can be lucrative, they come with inherent risks that both buyers and sellers should be aware of. Market fluctuations can significantly affect the value of the property between the time of the original purchase and the assignment sale. To mitigate this risk, parties should conduct thorough market research and consider timing their transaction to align with favorable market conditions.

Another risk involves the developer's consent , as not all developers allow assignments, and some may charge hefty fees. It is crucial to review the original purchase agreement and understand the developer's policies on assignments before proceeding.

Ensure all parties understand the terms and conditions of the assignment sale.

Obtain legal advice to navigate the complexities of the contract.

Secure financing early to avoid last-minute hurdles.

Buyers should be particularly cautious about the due diligence process, verifying the property's potential and the seller's right to assign the contract.

Finally, unexpected costs can arise, such as additional taxes or fees. Buyers and sellers should budget for these potential expenses and seek professional advice to understand the full financial impact of the transaction.

Comparing Assignment Sales to Traditional Real Estate Transactions

Assignment sales and traditional real estate transactions differ significantly in their structure and execution. Assignment sales offer a unique opportunity for buyers to step into the shoes of the original purchaser , often before the property is fully constructed. This can be particularly attractive in a rapidly appreciating market.

Traditional transactions involve the transfer of property from the current owner to the buyer, typically after the construction is complete. The process is more straightforward but may not provide the same level of investment opportunity as pre-construction deals.

Assignment Sale

Transfer of contract rights

Pre-construction phase

Potential for market value appreciation

Traditional Sale

Transfer of property title

Post-construction phase

Market value determined at the point of sale

In essence, assignment sales can be seen as a form of investment in the property's potential, whereas traditional sales are investments in the property as it stands.

Financial Implications of Assignment Sales

Understanding the Cost Structure

The financial landscape of an assignment sale is multifaceted, with various costs that both buyers and sellers must consider. Understanding the cost structure is crucial for all parties involved to ensure a fair and profitable transaction.

Initial Purchase Price and deposits already paid by the assignor form the base of the cost structure. On top of this, the assignor may seek to include a premium for the sale, reflecting any increase in the property's market value since the original purchase.

Additional costs may include:

Assignment fees charged by the developer

Legal fees for contract review and transfer

Real estate commissions if agents are involved

It's important for buyers to be aware of potential hidden costs, such as development levies or occupancy fees, that may not be immediately apparent.

Sellers should also consider the impact of capital gains tax, which can significantly affect the net proceeds from the sale. By carefully analyzing these expenses, both buyers and sellers can navigate the financial complexities of an assignment sale with greater confidence.

Tax Considerations for Buyers and Sellers

When engaging in an assignment sale, both buyers and sellers must be aware of the specific tax implications that can affect the profitability of the transaction. Tax liabilities can vary significantly depending on the jurisdiction and the individual circumstances of the parties involved.

For sellers, capital gains tax is a primary concern. If the property has appreciated in value since its initial purchase, the seller may be liable for taxes on the profit. In contrast, buyers should be mindful of the potential for land transfer taxes, which can add a substantial cost to the acquisition of the property.

Tax deductions may be available in certain situations, such as when a seller incurs expenses related to the sale. It is crucial for both parties to consult with a tax professional to understand their obligations and opportunities for savings.

The complexity of tax laws means that overlooking a critical detail can lead to unexpected financial burdens. Proper planning and advice are essential to navigate the tax landscape of assignment sales.

Here is a brief overview of common tax considerations in assignment sales:

Capital gains tax for sellers on the profit made from the sale

Land transfer taxes for buyers upon acquisition

HST/GST implications, particularly for new constructions

Potential for tax deductions related to sale expenses

The importance of accurate income reporting for both parties

Financing Options for Assignment Purchases

Securing financing for an assignment purchase can be more complex than obtaining a mortgage for a traditional real estate transaction. Lenders may have specific requirements and conditions when it comes to financing an assignment sale due to the nature of the transaction and the associated risks.

Buyers should be aware that not all lenders offer mortgages for assignment sales, and those that do may require a higher down payment or charge a higher interest rate. It's crucial to shop around and compare offers from various financial institutions.

Traditional Mortgage

Private Lender

Home Equity Line of Credit (HELOC)

Personal Savings

The key to successfully financing an assignment purchase is to understand the lender's perspective and to present a strong financial case. This often involves demonstrating a solid credit history, stable income, and a reasonable debt-to-income ratio.

Market Trends and Future Outlook

Current state of the pre-construction market.

The pre-construction market has been experiencing a dynamic shift in recent years, with a notable increase in the demand for pre-construction properties. This surge is driven by a combination of factors including urbanization, housing shortages, and the appeal of brand-new homes. Investors and end-users alike are showing a heightened interest in securing properties before they are built.

Urbanization and population growth fueling demand

Housing shortages leading to increased pre-construction projects

Technological advancements in construction promoting efficiency

The market's robustness is also reflected in the rising prices and the quick absorption rates of new developments. However, it's important to monitor the market closely as these trends can shift with economic and regulatory changes.

The financial landscape for pre-construction properties is also evolving, with new financing options emerging to accommodate the unique nature of these transactions. Buyers and sellers must stay informed about the latest developments to navigate the market effectively.

Predicting the Future of Assignment Sales

The future of assignment sales in the pre-construction market is shaped by a myriad of factors, including economic conditions, housing demand, and regulatory changes. Predicting the exact trajectory of this niche is never guaranteed , but certain trends can offer valuable insights.

Market dynamics play a crucial role in the viability and popularity of assignment sales. As housing markets evolve, so too does the attractiveness of these transactions. For instance, in a seller's market, assignment sales may become more prevalent due to increased demand and the potential for profit.

Economic forecasts and interest rates

Changes in housing supply and demand

Regulatory shifts and their impact on real estate practices

The adaptability of assignment sales to market conditions makes them a unique and flexible option for both buyers and sellers. This flexibility could be a key factor in their sustained presence in the real estate landscape.

While it's impossible to predict the future with certainty, stakeholders can stay informed and agile to navigate the potential shifts in the pre-construction market.

Impact of Economic and Regulatory Changes

The pre-construction market is sensitive to shifts in the economy and changes in government regulations. Economic fluctuations can significantly affect housing demand , altering the attractiveness of assignment sales. Interest rate changes, for example, can influence buyer affordability and thus impact the volume of assignment transactions.

Regulatory changes also play a crucial role. New laws can either facilitate or hinder assignment sales. For instance, policies aimed at cooling the housing market might include taxes or restrictions on assignment sales, which could reduce their frequency or profitability.

Understanding these factors is key to predicting the future of assignment sales:

Monitoring economic indicators such as employment rates, GDP growth, and inflation

Keeping abreast of new housing policies and tax laws

Assessing the impact of global economic events on local housing markets

Navigating the pre-construction market through assignment sales can be a strategic move for both buyers and sellers. For sellers, it offers a way to transfer their interest in a property before completion, potentially earning a profit without the need for final closing. Buyers, on the other hand, gain the opportunity to invest in a property that may have appreciated in value since its initial sale, often with more choices available than in the resale market. However, it's crucial to understand the complexities and legalities involved in assignment sales to ensure a smooth transaction. Both parties should seek professional advice to navigate the intricacies of contracts, financial implications, and market conditions. As the real estate landscape continues to evolve, assignment sales in the pre-construction market remain a viable and often lucrative option for informed investors and homebuyers.

Frequently Asked Questions

What is an assignment sale in the pre-construction market?

An assignment sale in the pre-construction market is a transaction where the original buyer of a property under development sells their interest in the purchase agreement to a new buyer before the completion of the construction.

Why would someone choose to sell their property through an assignment sale?

Are there legal considerations to be aware of when engaging in an assignment sale?

What are the financial implications for buyers and sellers in an assignment sale?

How does the process of an assignment sale differ from a traditional real estate transaction?

What are the potential risks of assignment sales and how can they be mitigated?

What Is Assignment Sale And How Does It Work?

By condos hq - may 30,2022.

An Assignment sale is basically the sale of a contract for purchasing pre-construction condo suites as well as freehold properties. An assignment sale is usually applicable to non-registered pre-construction condos and freehold properties.

Before we dive deeper into the topic, it’s important to understand some of the terms that are used in Assignment Agreements.

Vendor: A Vendor is basically the same thing as a Builder, Developer or Seller.

Assignor: An Assignor is the original or initial purchaser of the Purchase Agreement.

Assignee: An Assignee is the one who purchases the Assignment Agreement.

Business Day: Every working day is considered as a Business Day. This excludes Saturday, Sundays and Statutory Holidays.

Important facts to remember with regards to Assignments:

An Assignee or Buyer is not actually buying a property from the Assignee. Rather they are buying the “right” to acquire a property from a 3rd part, which in most cases is the Builder.

The Assignor is the one who assigns their Interest and Rights in the Original Agreement with the Builder or the Original Seller.

The Assignee is bound to “resume” and agree to all of the obligations of the Assignor as per the Original Agreement.

What are the benefits of Assignment Sale for Assignee or Buyer? Options: Assignment Sales provide more options for buyers when there is a shortage of listings available in the market. So even if you don’t find what you’re looking for in the market, you can still get a lot of options through Assignment Sales.

Less Competition: The people who look at these types of listings are fewer in number and as a result you won’t find the need to compete in order to get your preferred property.

Peace of Mind: The fact that fewer people look into these listings negates the chance of a Bidding War. This also means that you can get your desired property without much hassle.

VIP Incentives: There are also high chances of inheriting VIP Incentives such as the seven-year Tarion Warranty Program along with other incentives from builders like credits, upgrades, capped development charges and much more.

More Choices: Depending on how far along the construction progress is, you may still have a chance of selecting your own colors, finishes and upgrades for your suite.

Brand New Suite: Unlike a typical pre-construction contract, you will be able to get your suite faster instead of waiting for 2-3 years. Quite often the occupancy date is just a few months away.

Taxes: Assignment Sales also allow you to save up on taxes including GST and HST.

What are the benefits of Assignment Sale for Assignor or Seller? Re-investment: Assignment provides the Seller or Assignor with the option of pulling their equity out and investing in other projects.

No Carrying Costs: With Assignments, you can avoid paying monthly fees such as occupancy fees that can often last upto 2 years.

No Closing Costs: With Assignment Sale, Sellers don’t need to take out a mortgage or incur any other costs.

Play The Market: With Assignments, you can take advantage of the condo market. You have the option to sell your suite before completion and re-invest in other projects. This is one of the major economic drivers of Toronto and has no signs of slowing down.

What are the costs involved for an Assignee?

Assignment Price = Deposit + Profit (New Price – Original Price)

Occupancy Fee

Final Closing Cost:

Balance of Original Price

Estimated property taxes for upto 2 years

Hydro/water/gas meter installation and connection charges, which is approximately $500 – $700 per meter

Development charges/levies, which is potentially thousands of dollars

Tarion New Home Warranty which ranges from $600 – $1,900

Discharge of builder’s mortgages which is approximately $200 – $300 per mortgage

Law Society Charge for Builder’s lawyer, which is approximately $70

Two months of occupancy fees for reserve fund

Legal fees and disbursements

Land transfer tax, both provincial and municipal

GST/HST rebate

What are the costs involved for an Assignor? 1. HST on assignment price = (Deposit + Profit) x 13%

2. Income Tax on Profit

3. Assignment fee to the builder

4. Lawyer fee

5. Agent Commission

What are the steps involved in an Assignment Process? 1. Offer Negotiation 2. 1st Deposit To The Listing Broker

3. Fulfill Conditions

4. Assignee Lawyer Review/Assignor Lawyer Review

5. Waive Assignee Finance Condition

6. Builder Consent (True Condition)

Apply for builder consent

2nd deposit to the lawyer

Executive builder consent

Release deposit, Assignment close

What is The Timeline For Builder Consent? 1. Deposit Clear

2. 90% Sold

3. Upon Builder Consent:

Before Occupancy

After Occupancy

FREQUENTLY ASKED QUESTIONS:

What Happens if The Assignee Doesn’t Close? This is the same case as any sale. The Assignor in majority of the cases will not be able to get away from the obligations listed under the Agreement of Purchase and Sale. Both the Assignor and Assignee will be liable accordingly.

When Does The Assignor Get Money?

Depending on the closing date as well as the terms of assignment agreement that the Assignee and Assignor agreed on, the assignor usually gets their money when:

The Assignee gets occupancy or possession or

When the assignment is approved by the original seller, if applicable, or

Legal title is obtained by the Assignee

Who Gets The Interest, If Any Payable By The Builder On The Original Deposit?

Unless it is specified, the interest is paid to the Assignor in most cases.

Who Bears The Interim Occupancy Costs?

Once an assignment has been finalized, the Assignee typically pays occupancy costs through the final closing and will pay the final closing costs unless negotiated specifically.

What Are The Forms Used for Assignment Offers?

OREA Form 150 Assignment of Agreement and Sale Condominium

OREA Form 145 Assignment of Agreement of Purchase and Sale (Including Applicable Schedules)

In most cases, the developers have their own forms as well

Register to get the latest info on upcoming developments

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Condo Assignments Explained

By Condo Culture

__What is an assignment sale? __

In preconstruction, a condo unit isn't owned by its purchaser until all units in the condo development have been completed and the building has been registered. Only a purchaser’s legal rights and obligations outlined in the Agreement of Purchase and Sale (APS) can be sold prior to the building's completion. This is referred to as an assignment sale. The seller of this contract is the assignor and the purchaser, the assignee.

__Why Do Assignment Sales Happen? __

Preconstruction condos can take years to build. During the construction of a new condo, the circumstances of the original purchasers can change and they may no longer be willing or able to fulfill their financial obligations. When this happens purchasers can opt to sell their purchase contract to a willing buyer.

How much do Assignment Sales Cost?

There may be a fee associated with assignments. This fee can range between $3,000-$5,000 and is to be paid by the assignor. In some situations, developers may also waive this fee.

There are also a number of other legal and real estate costs and tax implications to be considered. As assignment sales may be more complex than other real estate transactions it is important that assignors and assignees work with a team of experienced real estate, legal and accounting professionals who understand assignment sales, are able to protect the interests of all parties involved and are able to simplify the process saving both money and time.

__Who pays what and when? __

Upon acceptance of a conditional offer, a deposit will be required to make the agreement legally binding. This amount can be negotiated.

Soon after, once the conditions have been satisfied, the assignee will be required to provide another deposit. In many cases, this deposit will be the same amount that was provided to the developer when the unit was originally purchased by the assignor (i.e. 15%).

Depending on the terms of the assignment the assignee will also be responsible for paying the profit (the difference in the assignment price and the original condo purchase price) to the assignor 1. once the developer approves the process or 2. when the seller takes possession and receives a mortgage. At Condo Culture the latter is most commonly seen.

Because a mortgage cannot be obtained at the time of the assignment sale (only once the development has been completed and registered), it is important that the assignee has access to enough cash on hand to cover the assignment and all of the associated costs.

Upon purchasing the assignment contract the assignee assumes responsibility for all outstanding costs relating to the condo at closing and during occupancy.

__What is an assignment clause? __

This is a clause that must be included in the APS to allow assignors to sell their contract through an assignment. Without it, assignments will not be permitted by the developer. If this clause is not included in the original APS, a request can be made to have it added as an amendment at the time the unit is initially purchased. In some cases developers may also not allow for assignment sales.

Advertising an assignment?

Most builders in the region will not permit the advertisement of assignments on MLS or realtor.ca. Be sure to consult with your realtor, lawyer and the developer for clarification on what is legal and permissible. Condo Culture uses its website, social media and internal client database to help advertise and sell assignment listings for its clients.

Benefits of Assignments for Assignees?

Access to a Project that may be already Sold Out - Purchasing an assignment can be a great way to get into a project that is in high demand and otherwise sold out. The first phase of Station Park for example launched and sold out late 2019. Interested purchasers can still access this project however by purchasing one of the current assignment sales available. See our featured listings for more information.
Value Opportunity - In some scenarios, assignments may be as a result of an assignor who is motivated to sell based on changes in life circumstances. In these situations, it may be possible to negotiate and purchase an assignment at a reduced price. Assignments may also present opportunities to purchase at a lower price than eventual market values at time of building completion (ie you purchased an Assignment 6 months before building completion when market values are rising).
Less Competition - Given that assignments are a unique product type, many purchasers and even some realtors aren't as familiar with them. This may mean less competition for these units, which can be advantageous to purchasers especially in extremely competitive real estate markets.

__Benefits of Assignments for Assignors? __

Freedom - By selling your assignment contract, you are no longer legally obligated and binded to the terms of your APS. You also have the freedom to use or reinvest the money of the assignment as you see fit.
Profit - Where the price of the condo unit has increased significantly since it was initially purchased the assignor may be able to sell an assignment and realize a profit. Many developers discourage using assignments solely as a strategy to profit and it is strongly advised that assignors fully understand all costs associated with an assignment before attempting to do so.
No Closing Costs - Because the assignment is sold prior to construction completion, the assignor will not have to take out a mortgage or be responsible for any of the closing costs.

For more information on assignments in the Waterloo region, watch this video where Condo Culture Sales Representative Tim Bolton, discusses the assignment process at CIRCA 1877, one of Kitchener-Waterloo's newest and most sought after condo developments.

At Condo Culture, we are experts in all things condos, this includes condo assignment sales.

Click here to speak with a Condo Culture representative to learn more about how assignment sales work or to discuss buying or selling an assignment.

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Home » Real Estate News » Real Estate Guide » Assignment Sales

Fundamental Difference Between a Resale vs Assignment Sales

June 21st, 2023 8 min read -->

A resale is a transaction where the buyer purchases a property from the original owner. The property is already completed and ready to move into. On the other hand, an assignment sale is a transaction where the buyer purchases the rights to a property from the original owner. The property is under construction and is still being prepared to move into. Here is a table that summarises the key differences between Resale vs Assignment Sales


Property Status	Completed	Under construction
Availability	Listed on MLS	Not listed on MLS
Mortgage requirements	Yes	No
Closing date	60-90 days	Varies
Risks	Title risk, builder risk, construction risk	Title risk, builder risk, construction risk, assignment risk

Table of Contents

What are the Pros and Cons of an Assignment Sale?

Assignment sales, also known as contract assignments or flipping contracts, are common in the real estate market. In an assignment sale, a buyer who has entered into a purchase agreement with a seller transfers their rights and obligations under the contract to a third party before the completion of the sale. While assignment sales can offer certain advantages, they also have potential drawbacks. Let’s explore the pros and cons of Assignment Sales:

Pros of Assignment Sales

One of the primary advantages of assignment sales is the potential for a significant profit. Assignors can secure a property at a lower price and then sell their contract to a new buyer at a higher price, capitalising on market appreciation or favourable negotiation.
Assignment sales allow buyers to secure a property without obtaining a mortgage or making a down payment upfront. This flexibility can benefit investors or buyers who may need more immediate access to funds but want to secure a property at a particular price.
Assignors can avoid the financial risks of property ownership, such as mortgage payments, property taxes, and maintenance costs. If the market conditions change or the buyer’s circumstances alter, they can sell the contract to another party without taking on these financial burdens.
Assignment sales provide a quick exit strategy for buyers who may change their minds or encounter unforeseen circumstances that prevent them from completing the purchase. By assigning the contract to another buyer, they can exit the transaction without the complications of selling the property on the open market.

Cons of Assignment Sales

Assignment sales involve intricate legal processes and require the involvement of multiple parties, including the original buyer, the assignee, the seller, and sometimes even lenders. The complexity can lead to challenges, delays, and increased legal expenses.
The success of an assignment sale depends on the consent of the original seller. Some sellers may not permit or may have restrictions on assignment sales, limiting the pool of potential properties available for assignment.
As an assignor, you relinquish control over the property and the final sale process once you transfer the contract to the assignee. This lack of control can be frustrating if the assignee’s actions or decisions affect the property negatively or lead to complications.
In a declining market, an assignor may need help finding a buyer willing to pay the assigned price. This can result in financial loss if the assignor cannot sell the contract or need to sell it at a lower price than they initially anticipated.
Some critics argue that assignment sales contribute to housing speculation and affordability issues, as they can drive up prices and limit housing supply. This perception can lead to negative public sentiment and potential regulatory scrutiny in some markets.

Assignment Sales for Sellers: What are its Advantages?

Higher Selling Price : In an assignment sale, sellers can sell their property more elevated than the original purchase price. Assignors, who act as intermediaries, often negotiate a higher price with the new buyer due to market appreciation, renovations, or other factors. This allows sellers to maximise their profit and earn more than anticipated.
Faster Sale Process : Assignment sales can expedite the sale process for sellers. Rather than waiting to complete the original contract, sellers can transfer their rights and obligations to the assignee. This enables them to sell the property without going through the typical marketing and negotiation process, which can save time and effort.
Avoidance of Holding Costs : Sellers can avoid holding costs associated with property ownership by selling through an assignment. These costs may include mortgage payments, property taxes, insurance, maintenance, and other ongoing expenses. Selling through an assignment allows sellers to transfer these responsibilities to the assignee, potentially saving them money in the long run.
Increased Flexibility : Assignment sales provide sellers more flexibility regarding their plans. By completing the sale through an assignment, sellers can move forward with their plans without waiting for the original contract to close. This can be particularly advantageous if sellers need to relocate, downsize, or make other arrangements quickly.
Lower Marketing Costs : When selling a property traditionally, sellers often need to invest in marketing efforts to attract potential buyers. This can include listing fees, advertising expenses, staging costs, and other related expenditures. In an assignment sale, the assignee typically assumes the responsibility of finding a new buyer, reducing or eliminating the need for sellers to incur marketing expenses.
Minimised Default Risk : In certain situations, sellers may encounter circumstances that prevent them from completing the original purchase contract. This could be due to financial constraints, changes in personal circumstances, or other unforeseen events. By assigning the contract to a new buyer, sellers can avoid defaulting on the contract and potential legal consequences.

What are the Advantages of Assignment Sales for Buyers?

Assignment sales offer several advantages for buyers in the real estate market. Here are the key benefits of assignment sales for buyers:

Potential for Lower Purchase Price : Buyers engaging in assignment sales can secure a property at a lower purchase price than buying on the open market. Assignors often negotiate a favourable purchase price when they contract with the original seller. This can be advantageous for buyers looking for a good deal or who want to invest in properties with potential appreciation.
Flexibility in Financing : Buyers participating in assignment sales can enjoy greater flexibility in financing options. Since they are buying the contract from the assignor, they may not need to secure a mortgage or make a substantial down payment immediately. This flexibility can be particularly beneficial for buyers needing more immediate access to large sums of money or facing challenges in obtaining traditional financing.
Ability to Customize the Property : In some cases, buyers engaging in assignment sales can customise or make changes to the property before the completion of the sale. This flexibility allows buyers to tailor the property to their preferences by selecting finishes, fixtures, or design elements and creating a personalised living space or investment property.
Potential for Profit : Assignment sales can provide buyers with profit potential. Suppose market conditions favourably change between the time the assignor entered into the contract and the completion of the sale. In that case, buyers can sell the property at a higher price, capturing the appreciation and generating a profit without ever taking ownership. This profit potential can attract investors or buyers looking for short-term gains.
Expedited Purchase Process : Assignment sales can facilitate a faster buyer purchase process. Rather than going through the lengthy process of searching for a property, negotiating with sellers, and dealing with potential competing offers, buyers can step into an existing contract and finalise the sale with the assignor. This can save time and streamline the purchase process, allowing buyers to secure a property quickly.
Lower Transaction Costs : Assignment sales may involve lower buyer transaction costs than traditional property purchases. Since buyers purchase the contract from the assignor, they may not need to pay certain closing costs associated with the initial purchase, such as land transfer taxes or legal fees. This can result in savings and make the overall transaction more affordable for buyers.

What Disadvantages Does a Buyer Face on Assignment Sales?

Here are the key drawbacks of assignment sales for buyers:

Limited Property Selection : Assignment sales often involve a limited pool of properties. Assignors may sell their contracts for various reasons, such as properties with a potential appreciation or in-demand locations. As a result, buyers participating in assignment sales may have fewer options than in the broader real estate market.
Potential Seller Consent Issues : The success of an assignment sale depends on the consent of the original seller. Some sellers may have restrictions on assignment sales or may simply refuse to allow the transfer of the contract to a new buyer. This can create challenges for buyers who have invested time and effort into an assignment transaction only to have it rejected by the original seller.
Lack of Control and Information : Buyers engaged in assignment sales have limited control over the original contract and the terms negotiated by the assignor. They may have yet to be involved in the initial negotiation process, which can lead to uncertainty about the terms and conditions of the purchase. Additionally, buyers may need more access to information about the property, its history, or potential issues, as they rely on the assignor for this information.
Increased Complexity and Potential Delays : Assignment sales can be more complex than traditional property purchases. Multiple parties include the original seller, the assignor, and potential lenders. This complexity can lead to delays, as other legal and administrative processes may be required. Buyers may need to navigate various agreements and documents, potentially leading to more extended closing periods or increased legal expenses.
Higher Risk of Non-Completion : Assignment sales carry a higher risk of non-completion than standard property purchases. Since buyers are assuming a contract from the assignor, they may face uncertainties and risks associated with the assignor’s ability to fulfil their obligations. If the assignor fails to complete the contract, it can lead to complications, potential legal disputes, and the loss of any invested time or resources.
Market Fluctuations and Financial Loss : While assignment sales can offer profit potential, they also expose buyers to the risk of financial loss. Suppose market conditions decline or change unfavourably between the time of the assignment and the completion of the sale. In that case, buyers may need help to sell the property for a profit. Sometimes, they may need to sell lower than the initial purchase price, resulting in a financial loss.

What are the Disadvantages of Assignment Sales for a Buyer?

Here are the key drawbacks of assignment sales for buyers:

Limited Property Selection: Assignment sales often involve a limited pool of properties. Assignors may sell their contracts for various reasons, such as properties with a potential appreciation or in-demand locations. As a result, buyers participating in assignment sales may have fewer options than in the broader real estate market.
Potential Seller Consent Issues: The success of an assignment sale depends on the consent of the original seller. Some sellers may have restrictions on assignment sales or may simply refuse to allow the transfer of the contract to a new buyer. This can create challenges for buyers who have invested time and effort into an assignment transaction only to have it rejected by the original seller.
Lack of Control and Information: Buyers engaged in assignment sales have limited control over the original contract and the terms negotiated by the assignor. They may have yet to be involved in the initial negotiation process, which can lead to uncertainty about the terms and conditions of the purchase.
Additionally, buyers may need more access to information about the property, its history, or potential issues, as they rely on the assignor for this information.
Increased Complexity and Potential Delays: Assignment sales can be more complex than traditional property purchases. Multiple parties include the original seller, the assignor, and potential lenders. This complexity can lead to delays, as other legal and administrative processes may be required. Buyers may need to navigate various agreements and documents, potentially leading to more extended closing periods or increased legal expenses.
Higher Risk of Non-Completion: Assignment sales carry a higher risk of non-completion than standard property purchases. Since buyers are assuming a contract from the assignor, they may face uncertainties and risks associated with the assignor’s ability to fulfil their obligations. If the assignor fails to complete the contract, it can lead to complications, potential legal disputes, and the loss of any invested time or resources.
Market Fluctuations and Financial Loss: While assignment sales can offer profit potential, they also expose buyers to the risk of financial loss. Suppose market conditions decline or change unfavourably between the time of the assignment and the completion of the sale. In that case, buyers may need help to sell the property for a profit. Sometimes, they may need to sell lower than the initial purchase price, resulting in a financial loss.

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Frequently Asked Question (FAQs)

What is the purpose of resale.

Resale is to transfer ownership of a previously owned item or property from the seller to a new buyer.

What is selling and reselling?

Selling refers to exchanging goods or services for monetary compensation, while reselling involves selling something previously purchased, typically to make a profit.

How much money can you make from resale?

The amount of money on resale depends on the type of property you have and the real estate environment of the area.

What is a good resale percentage?

The resale percentage depends on the real estate environment.

Contact Our Real Estate Experts

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08 Sep 2011

What is an Assignment Sale and how do Assignments work?

Here’s how the assignment sale works in toronto real estate.

You may have heard the term “Assignment Sale” lately as it has become really popular with speculative condo investors.

Assignment Sales are defined as follows: The Assigning or Selling of your rights to purchase a property.

To clarify, you’re not actually selling the property. Since the Assignor (Seller) hasn’t taken possession yet (usually because it’s not built or has not registered yet), they are simply assigning the rights to the Assignee (Buyer).

Here’s an example: If I walked in to a condo sales centre, signed and bought a pre-construction unit from the floor plans I would have the right to purchase said unit when it was constructed and registered. An Assignment Sale is when I take that paper that I signed, my right to purchase, and sell it to someone else; The Assignee, for a certain amount. To break it down, if I agreed to buy the condo for $300,000, then found a Buyer aka Assignee, the Assignee has the right to purchase said unit for $300,000 but he/she has paid me a premium on top of the $300,000 for that right.

A client just went through one of these for a condo that he had bought pre construction. He, as usual, got in over his head with purchases and decided to assign a unit in order to free up some cash to make the deposits on another place that he had purchased pre construction. After spending some time spreading the word and marketing the property I received a call from a colleague saying he had a buyer for me and we eventually made the deal happen. Here is how I structured the deal to make it work for my client:

He had paid $356,400 for this unit (I should say, he had agreed to pay that amount when it was ready a year or so from now). He had made initial deposits of $53,750 , or 15% of the purchase price. My goal was to recover as much of that now for my client. Next, the buyer aka Assignee agreed to purchase said unit from my client for $380,000 . What this means is that he will eventually purchase the unit from the developer for $356,400 but give my client $23,600 for the right to do so (Total to the Buyer is $380,000).

So now the Assignee owes the initial deposit $53,750 plus the built in profit of $23,600 all totaling $77,350. Most people don’t have that kind of money lying around but since the money was needed right away we worked out a plan where he would pay the initial deposit of $53,750 now (borrowed from his parents) and the remainder of the cash from his mortgage when the condo was built and ready to register. We were lucky because the Assignee had the ability to come up with the cash.

Sometimes when the Assignee doesn’t have the option of paying out the Assignor it can be agreed that all the money will be transferred when the condo is ready and registered. An Assignor would likely agree to the latter only if the profit margins are much higher and the money is not needed right away. In this case since my client needed to be paid out now he accepted the small profit and was able to cash out and pay for his most recent purchase.

Assignment Sales, unlike resale transactions can get quite complicated. It is very important that you have an experienced Spring Realty Broker to work out the contract and an experienced real estate Lawyer to help mitigate risk for the client. I have been involved in hundreds of Assignment Sale transactions and with the help of Feld/Kalia Team of lawyers we get the job done right. Contact Us to get started.

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What You Need to Know About Assignment Sales

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Condo under Construction With CN Tower Near By

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.

Home prices are skyrocketing. These are the cheapest places in Arizona to buy a home.

As home prices climb in metro Phoenix , it's getting harder to find an affordable home for sale.

In the past decade alone, the number of homes for purchase under $200,000 went from half of all sales to 21% of all home sales, according to a recent report from Realtor.com . And, the national median listing price of homes has increased nearly 40% since 2019.

While the South and upper Midwest have more affordable homes than other parts of the United States, Arizona has four counties where the average home sold for less than $200,000.

Here are the cheapest Arizona and United States counties to buy a home.

How much do homes cost in Arizona?

These are the median sales prices for existing homes in 2023, according to the National Association of Realtors.

Apache County: $69,020
Cochise County: $219,660
Coconino County: $479,800
Gila County: $229,570
Graham County: $183,960
Greenlee County : $96,880
La Paz County: $121,230
Maricopa County: $459,020
Mohave County: $288,520
Navajo County: $221,520
Pima County: $326,870
Pinal County: $357,320

What does rent cost in metro Phoenix? See how prices in these 6 cities compare

5 cheapest US counties to buy a home

Texas was home to five of the 10 cheapest counties in the United States to buy a home. Kansas had three counties in the top 10.

These are the lowest median sales prices for existing homes in 2023, according to the National Association of Realtors.

Todd County in South Dakota: $42,940
Cochran County in Texas: $50,140
McDowell County in West Virginia: $50,960
Cottle County in Texas: $53,690
Stonewall County in Texas: $53,690

5 most expensive US counties to buy a home

California was home to six of the 10 most expensive counties in the United States to buy a home. Kansas had three counties in the top 10.

These are the highest median sales prices for existing homes in 2023, according to the National Association of Realtors.

Santa Clara County in California: $1,583,130
San Mateo County in California: $1,573,470
Marin County in California: $1,454,450
San Francisco County in California: $1,332,660
Nantucket County in Massachusetts : $1,313,450

Places for the whole family: This is the best Arizona city to raise a family in, new study shows. Here's why

USA TODAY reporter Sara Chernikoff contributed to reporting to this article.

Everything you need to know about Preconstruction Assignment Sales

Have you sold pre-construction homes before closing on assignments?

Have you wondered about what are the tax implications on selling pre-construction homes before closing?

We often advise our clients to not to sell their pre-construction homes before closing if possible. It can trigger a series of tax implications – HST and income tax implications.

Before the announcement of Budget 2022, CRA had adopted the policies that HST would be applicable on not just the assignment fees, but also the deposit.

This could be a huge tax cost that most investors weren’t aware of.

Now, let’s use an example to explain .

Say you agree to purchase a pre-construction home for $700,000. You sign the agreement of purchase and sale and pay a deposit of $100,000 to the builder.

The new home is expected to be completed a few years later.

You decided to sell the property on assignment before it’s ready for closing for an additional $50,000.

Scenario 1: When you signed the agreement of purchase and sale, you intended to move into the property and use it as your primary residence.

Life circumstances change. You now decided to sell the property before closing. You sold it on assignment before May 6, 2022 .

HST: As your intention was to move into the property as your primary residence, you had no HST liability obligation.

Again, intention is subjective. If you’re questioned in court, you would have to provide evidence to prove your own intention.

Most clients thought that the CRA would have to prove that they were wrong. The truth however is that the taxpayers are the one who have the responsibility to prove to CRA their own filing position.

Make sure your have documentation proving your initial intention.

Income Tax: Assuming you have strong documentation proving that you did intend to purchase this pre-construction home as your primary residence, the $50,000 assignment fees could be reported as capital gain.

Scenario 2: When you signed the agreement of purchase and sale, you intended to move into the property and use it as your primary residence.

Life circumstances change. You now decided to sell the property before closing. You sold it on assignment after May 6, 2022 .

Budget 2022 changed the rule. For all assignment sales happened after May 6, 2022, regardless of your intention, you’re required to pay HST on the assignment sales.

HST implication:

This means that the $50,000 collected is no longer all yours. This $50,000 collected, if you don’t charge HST on top, is inclusive of HST.

You must remit the HST to CRA on sale on assignment. In this case, it would have been $5.8K.

Presumably, you would also be able to claim Input Tax Credit, which is the HST you paid on services that you used to allow you to sell the property. This includes the HST you paid on your legal cost and HST you paid on brokerage fees.

The net amount can be remitted to CRA.

Income Tax Implication:

Budget 2022 also made some rule changes when it comes down to sale of property. The sale of a property within one year of ownership is considered on income account, meaning 100% of the profit you make is taxable, with some exceptions allowed, effective Jan 1, 2023.

When you apply this new rule to this scenario, it is unknown as to whether an assignment sale is considered a flipped property. It’s difficult to say whether this rule is applicable to assignment sale at this point.

Regardless, you still would need to keep proper and relevant documentation supporting your intention that you were trying to move into the property as your primary residence. With proper documentation, you could still report the net income from assignment sale on capital account, meaning only 50% of the profit you make is taxable.

In our example, assuming client didn’t incur other cost of selling, the client would be reporting $44K of capital gain, 50% of which would be taxable.

Scenario 3: When you signed the agreement of purchase and sale, you intended to rent out your property.

Interest rate changed. You now decided to sell the property before closing. You sold it on assignment before May 6, 2022 .

Your intent was never to move into the property as your primary residence or have any of your family members moving in, as a result HST is applicable on assignment sale.

Assignment fees are subject to HST. $50,000 assignment fees you collected are subjected to HST.

CRA also adopted the position that the deposits $100K are also subject to HST as well. Ouch!

You thought you made $50,000 – but after considering the HST on assignment fees $5.8K and HST on deposits $11.5K, you really only net $33K.

This calculation hasn’t considered the brokerage fees as well as the lawyer fees yet. Yikes!

Income Tax implication:

The net amount profit of $33K (assuming there’s no brokerage fees or lawyer fees, if you have, the net profit is lower) would likely have to be reported as income, 100% of it is taxable.

If you own the property in your personal name, the entire amount is added to your job income or whatever income you have in your personal name. You’re taxed at the respective marginal tax rates, which can be as high as 53.5% in Ontario.

Triple Yikes!

If you own the property in the corporation, the profit is taxed as regular business income, most likely at 12.2% for qualified small businesses.

Scenario 4: When you signed the agreement of purchase and sale, you intended to rent out your property.

Interest rate changed. You now decided to sell the property before closing. You sold it on assignment AFTER May 12, 2022 .

The Government also recognized that charging HST on deposits were not right. Budget 2022 specified that HST would no longer be charged on deposits .

Assignment fees are subject to HST but deposits are not subject to HST anymore to avoid double taxation.

Assignment fees are reported as income 100% taxable.

So continuing with the same example, HST is applicable on the $50,000 assignment fees, meaning that you would incur HST liability of $5.8K as calculated above.

Again, you could offset the HST liability with the HST you pay on realtor commission as well as lawyer fees on closing.

The net amount would have to be paid to CRA.

The net profit of $44K (assuming there’s no brokerage fees or lawyer fees, if you have, the net profit is lower) would likely have to be reported as income, 100% of it is taxable.

Similar to Scenario 3, if you own the property in your personal name, the entire amount is added to your job income or whatever income you have in your personal name. You’re taxed at the respective marginal tax rates, which can be as high as 53.5% in Ontario.

Now that we’ve gone through the assignment sales tax implication in details – Are you still planning to sell your properties on assignment?

Let us know below.

Lastly, our team has been working tirelessly to prepare for the upcoming Wealth Hacker Conference on preparing everyone for the upcoming recession. We have experts such as Dalia sharing her insights on how to protect your portfolio and grow from this recession. If you are lost, join us at the upcoming Wealth Hacker Conference.

Visit WealthHacker.ca now to get your tickets.

Until next time, happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

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Top things to know about Copilot+ PCs from Microsoft Surface, available today at Microsoft.com

Microsoft Store Team

Available today, the all-new Copilot+ PCs from Microsoft Surface – Surface Laptop and Surface Pro – are thin, light and beautiful devices that help you do more of what you love. Whether it’s starting a new creative project, connecting with friends and family or pursuing a new business venture, these devices are designed to support your journey.

The new Surface Laptop and Surface Pro are Copilot+ PCs, which are the fastest, most intelligent Windows PCs on the market. They are available in four color options at an incredible value, beginning at $999 Estimated Retail Price (ERP) USD on Microsoft.com or at a Microsoft Experience Center .

Exclusively on Microsoft.com, customers can purchase Copilot+ PCs from Microsoft Surface with 64GB memory (RAM) configurations which offer more performance and multi-tasking:

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Read on for everything you need to know about the new Copilot+ PCs from Microsoft Surface.

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New and enhanced audio and video effects bring new meaning to ”camera ready.” Both device cameras are powered by new features to Windows Studio Effects. Powered by an industry-leading NPU, they help improve lighting, ensure you appear clear and crisp on video, reduce background noise and offer creative filters so you can express yourself on camera. Built to automatically improve video calls, it’s like having a studio ring light and microphone right on your Windows PC! And the Surface Pro’s ultrawide field-of-view camera keeps you, or the whole family, in focus, even as you move around your space.
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Learn how to unlock the best of the new AI-powered features on your Copilot+ PC .

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Alongside the new Surface Pro, we are introducing the Surface Pro Flex Keyboard , unlocking powerful new levels of flexibility to effortlessly adapt to your work and play routines. Ready to attach to your Pro for the ultimate laptop set-up or detach for more flexibility and to support your creative workflows. It is built with extra carbon fiber layers for stability and has a larger, customizable haptic touchpad. With integrated pen storage, your Slim Pen is secure, charged and ready to go. Accessibility remains core to our approach, so we designed the new Surface Pro Flex Keyboard with a bold keyset option to reduce eye strain and assist people with low vision.

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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!

Got a question? Submit it here!

Navigating New Condo Occupancy and Rental: Insights from Personal Experience

As the real estate market continues to evolve, investing in new condos for rental purposes has become an increasingly popular strategy. However, navigating the intricacies of occupancy and renting out these properties comes with its own set of challenges and considerations. Drawing from personal and client experiences, in this blog we share some valuable insights to guide you through the process.

The Power of Ownership: A Guide for Young Adults in Today’s Real Estate Market

As a realtor, I've had the privilege of helping countless individuals and families find their dream homes. Beyond just finding a place to live, I've witnessed firsthand the transformative power of ownership, especially in today's dynamic market conditions. If you're a young adult pondering the idea of owning your piece of real estate, here's why it's more important than ever for your future financial security.

Understanding Development Charges in Toronto

Development charges in Toronto have been subject to change over time, influenced by factors such as infrastructure needs, municipal policies, and economic conditions. In this blog we explore insights into potential implications for various stakeholders if development charges were to increase.

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Contact Madiha Khan Sales Representative, Union Capital Realty 647.262.2300 [email protected]

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Polestar (PSNY) stock slides as losses widen, will new EVs boost sales?

EV maker Polestar’s (PSNY) stock is down Friday after reporting 2023 results. Can Polestar’s new electric models help turn things around as losses rise? The report comes as the first Polestar 3 buyers received their electric SUVs this week.

Polestar stock drops after 2023 earnings results

After several months of delaying, Polestar released its 2023 financial results Friday, showing falling revenue and widening losses.

Polestar’s revenue slipped 3% from $2.45 billion in 2022 to $2.38 billion last year. The lower top line was mainly due to increased discounts and fewer carbon credit sales.

As a result, the EV maker’s operating losses rose 13% to $1.46 billion, up from $1.29 billion in 2022. Lower revenue and rising sales costs led to higher losses. It also included a one-time share-based listing charge of $372 million and a higher impairment of $450 million after reassessing Polestar 2 inventory.

Polestar sold 54,626 vehicles last year, up 6% from the 51,549 sold in 2022. The EV maker added 34 locations and 33 service points for a total of 192 and 1,149, respectively.

Polestar’s stock slid 4% on Friday following the 2023 earnings release. Polestar shares are down 63% in 2024 and over 92% from its all-time high.

Can Polestar turn things around as new EVs roll out?

Despite rising losses and lower revenue, Polestar believes new EVs, like the Polestar 3 and 4, will help boost sales.

Polestar expects to sell over 155,000 vehicles next year, a significant jump from the just under 55K sold in 2023.

The news comes after Polestar delivered its first Polestar 3 models to customers this week. Polestar is delivering the electric SUV across two continents as it rolls out to new markets throughout the year.

The first Polestar 3s were delivered in Sweden, while the North American Polestar 2 is handing over the first models in California, New York, and Illinois. On Friday, more models will be delivered to Germany and Norway.

Polestar also introduced a new lower-priced Long range Single Motor Polestar 3 model this week. The lower-cost model is available in Europe, starting at $85,500 (€79,890), including the handover fee. It will be available to order in the US, Australia, and other markets later this year.

Polestar will begin Polestar 3 production in South Carolina this summer to expand the brand in the US.

With the US setting a new 100% tariff rate on Chinese EVs, Polestar looks to overcome it with local production.

As the EV maker looks to gain market share, it also l aunched the new 2025 Polestar 2 with added Swedish Gold design elements and more range.

Can Polestar’s new EVs help boost sales? Let us know what you think in the comments.

FTC: We use income earning auto affiliate links. More.

Peter Johnson is covering the auto industry’s step-by-step transformation to electric vehicles. He is an experienced investor, financial writer, and EV enthusiast. His enthusiasm for electric vehicles, primarily Tesla, is a significant reason he pursued a career in investments. If he isn’t telling you about his latest 10K findings, you can find him enjoying the outdoors or exercising

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IMAGES

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COMMENTS

A Comprehensive Guide To Selling Your Assignment Condo
Assignment sales are more complicated compared to their resale counterparts, but with some guidance, the process is easy. ... 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 ...
What Is an Assignment Sale? Understanding the Ins and Outs of This Real
Assignment sales introduce a unique dynamic in real estate transactions, ... For buyers, assignment sales sometimes offer the opportunity to get into a brand-new unit at a potentially lower cost. Since the assignee is stepping into an existing agreement, they might benefit from the original purchase price, which could be lower than current ...
How To Navigate The Real Estate Assignment Contract
The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself. The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers).
Assignment Sale: A Guide
An Assignment Sale can be an incredible opportunity to purchase a unit that you may have missed during the pre-construction sale phase. Even if an assignment is selling for double its original price, the unit could still be worth more upon completion. It's important to ensure that your best interests are being considered in this regard.
What is an Assignment Sale [2021]: Agreement Purchase Involved & More
An assignment sale occurs before the final closing of the property between the original purchaser (Assignor) and the builder. As a new purchaser of an agreement, you are going to assume everything that the original purchaser agreed to in their original contract. For this reason, it is important to appoint a lawyer by your side to go over two ...
Pros of Purchasing an Assignment Sale
What is an Assignment Sale? An assignment involves the transfer of the original Agreement of Purchase and Sale (APS) from the original purchaser (the Assignor) to a new purchaser (the Assignee). ... Low-Cost Ways to Enhance Condo Entryways for a Welcoming Feel. Apr. 17, 2024. Apr. 17, 2024. Apr. 11, 2024. Quick Fixes for Common Plumbing Issues ...
What is an Assignment Sale?
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 may be given an assignment clause in your original Agreement of Purchase and Sale (APS). This is key.
What Is An Assignment Sale
It is the sale of a contract to buy a unit that is still under construction. In other words, the contract or right to purchase the property after it is finished is being sold, not a unit that has already been completed. The initial buyer of a property (the "assignor") transfers their contractual duties to a subsequent buyer (the "assignee
Unlocking Opportunities: Understanding the Basics of Assignment Sales
An assignment is when the original buyer of a pre-construction property (who signed a contract with the builder) sells their contract to someone else before the purchase closes. Essentially, the buyer takes over for the seller in the contract and pays the deposit plus appreciated value/profit. Assignments happen for a number of reasons.
Condo Assignment Sales Explained
Below is a step-by-step explanation of how a presale condo assignment sale works from start to finish. Should you have any questions, feel free to reach out to me at 604-763-3136. Developer's Assignment Policy Check: Before anything else, the assignor's real estate agent should verify if the developer permits assignments.
10 Things To Know About Assignment Sales in Real Estate
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. ... With assignment sales, there are essentially 2 closings: the closing between the Assignor and the Assignee, and the closing between ...
Is Buying a Home on Assignment a Good Idea?
Properties purchased on assignment cost less than their equivalent on the resale market. This is because the prices of homes on the assignment market are discounted to compensate potential buyers for buying an unfinished product and having to wait for completion. ... The amount of deposit required for an assignment sale will vary depending on ...
5 Tips when Buying New Condos on Assignment
Let us examine a few reasons why assignment sale agreements for condos have the upper hand in the realm of the purchase and sale contract: 1. You can buy a brand-new condo at a low purchase price. By buying a state-of-the-art condo on assignment sales, you're likely to purchase a product that has been off the market for quite some time.
How Do Assignment Sales Work
Assignment sales have many benefits for both buyers and sellers. Although they can sometimes be complex, working with an experienced agent is the best way to ensure an assignment sales goes smoothly. ... Price: Pre-construction units usually cost less. There are greater risks involved and the units haven't changed hands through re-sale yet ...
An Assignment Sale in the Pre-Construction Market
Assignment sales are a unique facet of the pre-construction real estate market, offering an alternative path for property transactions before a building is completed. This article delves into the intricacies of assignment sales, examining their role, process, and implications within the pre-construction market. By exploring the benefits and risks, financial aspects, and the current trends, we ...
What Is Assignment Sale And How Does It Work?
An Assignment sale is basically the sale of a contract for purchasing pre-construction condo suites as well as freehold properties. An assignment sale is usually applicable to non-registered pre-construction condos and freehold properties. ... Final Closing Cost: Balance of Original Price. Estimated property taxes for upto 2 years. Hydro/water ...
Condo Assignments Explained
How much do Assignment Sales Cost? There may be a fee associated with assignments. This fee can range between $3,000-$5,000 and is to be paid by the assignor. In some situations, developers may also waive this fee. There are also a number of other legal and real estate costs and tax implications to be considered. As assignment sales may be more ...
What You Need to Know About Condo Assignment Selling and Buying
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.
Guide To Pros and Cons of Assignment Sale
Cons of Assignment Sales. Assignment sales involve intricate legal processes and require the involvement of multiple parties, including the original buyer, the assignee, the seller, and sometimes even lenders. The complexity can lead to challenges, delays, and increased legal expenses. The success of an assignment sale depends on the consent of ...
What is an Assignment Sale in Real Estate?
An Assignment Sale is when I take that paper that I signed, my right to purchase, and sell it to someone else; The Assignee, for a certain amount. To break it down, if I agreed to buy the condo for $300,000, then found a Buyer aka Assignee, the Assignee has the right to purchase said unit for $300,000 but he/she has paid me a premium on top of ...
What You Need to Know About Assignment Sales
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 ...
Arizona home sales: See how much houses cost in each county
In the past decade alone, the number of homes for purchase under $200,000 went from half of all sales to 21% of all home sales, according to a recent report from Realtor.com. And, the national ...
Everything you need to know about Preconstruction Assignment Sales
For all assignment sales happened after May 6, 2022, regardless of your intention, you're required to pay HST on the assignment sales. ... In our example, assuming client didn't incur other cost of selling, the client would be reporting $44K of capital gain, 50% of which would be taxable. Scenario 3: When you signed the agreement of ...
Top things to know about Copilot+ PCs from Microsoft Surface, available
Free and fast shipping with 60-day returns: Get your items quickly with 2-3-day shipping at no extra cost or minimum purchase required and enjoy the flexibility of 60-day returns on almost any physical product. 60-day price protection: Shop with confidence knowing you have 60 days of price protection from your delivery date. If the price ...
What you need to know about condo Assignment sale
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 ...
US home prices just hit a record high. Americans are still buying
Homes in America are the most expensive they've ever been, according to one measure. The median price of a previously owned US home climbed for the eleventh consecutive month in May, up 5.8% ...
The ongoing cyber-attack incident at CDK Global has crippled car ...
The Assignment with Audie Cornish One Thing Tug of War CNN Political Briefing ... Vehicles for sale at a dealership in Richmond, California, US, on Friday, June 21, 2024. CDK Global, a software ...
Polestar stock slides as losses widen, can new EVs boost sales?
The lower-cost model is available in Europe, starting at $85,500 (€79,890), including the handover fee. It will be available to order in the US, Australia, and other markets later this year.
America's housing crisis continues to worsen
The Assignment with Audie Cornish ... The cost burdens are even worse for renters. ... A persistent lack of homes available for sale is spurring bidding wars.
How Much Does an Abortion Cost? Post-Dobbs, Too Much
Two years post-Dobbs, too many nonprofits still rely on volunteers and bake sales to underpin their efforts. Lawmakers and philanthropists need to step up. June 23, 2024 at 8:00 AM EDT.

The Lourantos Group

A Comprehensive Guide To Selling Your Assignment Condo

What is a preconstruction condo assignment sale?

The Builder’s Role In Assignments:

How do you sell an assignment condo?

Important Dates:

What Is Negotiable During An Assignment Sale:

Conditions In Assignment Sales

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

What Does It Cost To Sell An Assignment condo:

Taxes due on an assignment sale:

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

The most common mistakes when selling an assignment:

Poor communication/understanding:

Ignoring deadlines or dragging your feet:

Incomplete Buyer Vetting:

Misunderstanding fees:

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.

6 important facts to consider when selling a preconstruction condo.

Everything you need to know to sell your preconstruction condo assignment

What Is an Assignment Sale? Understanding the Ins and Outs of This Real Estate Process

Demystifying the Elements of an Assignment Sale

How Assignment Sales Work

The Assignment Clause: A Vital Cog in the Wheel

Understanding the Financials: Costs and Fees

Navigating Through the Interim Occupancy Period

The Pros and Cons of Assignment Sales

The Bright Side: Benefits of Assignment Sales

The Flip Side: Challenges and Risks of Assignment Sales

Making the Move: Deciding If an Assignment Sale Is Right for You

Conduct Due Diligence: Know What You're Getting Into

Consider Your Financial Standing and Long-Term Goals

Stay Informed About Market Conditions

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Frequently Asked Questions

Can You Make Money on an Assignment Sale?

What Are the Risks of Buying an Assignment Sale?

How Do I Sell My Pre-Construction Assignment?

Do I Pay Tax on Assignment Sale?

What Is the Difference Between a Transfer and an Assignment?

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