assignment sale lawyer

Greater Toronto Area Real Estate

Toronto | Mississauga | Hamilton | Durham

Call Us Anytime: 416-274-2068

Prefer Text? 416-568-0427

Looking for Bspoke Realty?

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.

Search by keyword or select a category below.

• Market Updates
• First Time Buyers
• 65+ Real Estate
• Aging in Place
• Mississauga
• Real Estate Crushes
• For Realtors

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.

Leave A Comment Cancel Reply

Your email address will not be published. Required fields are marked *

Like What You're Reading?

• Name This field is for validation purposes and should be left unchanged.

AssignToday Blog

10 Essential Things To Know About Real Estate Assignment Sale (For Sellers)

What is an assignment.

As the name implies, an assignment is when the original buyer of a property gives up their rights to that contract and assigns it to another buyer (Assignee). 

An assignment is different from a sale of property because in a sale both parties (the seller and buyer) are involved; and in an assignment, the seller transfers their rights, interest and benefits under their contract to another buyer. The seller can assign their contract before or after closing day.

When does someone need to assign a real estate purchase contract?

When should you assign your contract?

If you are unable to complete the purchase of a property for whatever reason, but would like to move forward with another buyer and give them an opportunity to buy the property at an agreed upon price, then an assignment may be right for you. Some common reasons why someone might need to assign a real estate purchase contract include:

• Financial hardship due to job loss or sudden illness
• Move to different city/ country
• Personal reasons like marriage, children or birth of newborn
• Death or incapacitation of the original buyer
• Loss of financing
• Original buyer looking to sell off to earn profit (speculative buying)

Is it legal to assign a contract?

The short answer is yes, it’s legal to assign contracts. However, there are certain things you need to know about how this process works before you decide whether or not you want to go through with it.

The first thing you should know is that assigning a contract isn’t a casual decision—it’s a legal document. When you sign an assignment agreement, you’re entering into an agreement with another party (the buyer) where they agree to take over your responsibilities under the original contract.

The second thing worth mentioning here is that while assignments aren’t necessarily uncommon occurrences––especially when dealing with multiple parties––they can be tricky because they often involve changing hands during different stages of closing proceedings which can make things unnecessarily complicated sometimes if not done correctly or thoroughly enough beforehand

How do assignments work?

An assignment is a transfer of a seller’s interest in the contract. In other words, it’s when a buyer assigns their rights under a contract to someone else. This can happen before closing or after closing and both scenarios have different implications for the original buyer (the assignor), as well as the new buyer who has taken over their position (the assignee).

Here’s how it works: The assignor transfers his or her interest in the contract to another person—this is known as an “assignment.” In order for this transfer to take place legally, four conditions must be met:

• Both parties must agree on how much money will be exchanged between them;
• Any existing obligations between either party must be transferred over without interruption;
• All future obligations that arise from signing onto this agreement must also be transferred over without disruption;
• And finally, if there are any fees associated with making this switch then those need to be paid

Are there any restrictions on assignments of purchase contracts?

The answer, in a nutshell: No.

The law does not restrict assignments of purchase contracts. In other words, if you want to assign your contract to another buyer or seller, you can do so freely and without penalty—as long as both parties have signed the contract and the sale has closed (or gone into escrow).

Can I assign my purchase contract to anyone?

The answer to this question is a resounding Yes.

You can assign your contract to anyone you like, as long as they meet the seller’s requirements for buyers.

For example, if your purchase contract requires that buyers have good credit and that they put down 20% in earnest money, then only someone who meets these criteria will be able to take over your contract.

So, who might assign their purchase contract? Here are some examples:

• Family members
• Friends (or friends-of-friends)
• Real estate agents (particularly agents who specialize in assignments)

Can the buyer and seller agree to set a price for the contract assignment before it happens?

The answer is Yes, but it’s not necessary or recommended.

The reason is that once an assignment has been documented, there are no further negotiations between the buyer and seller on that contract. So there’s no need for any further discussion about price in advance of closing (unless you want to include some kind of non-binding agreement).

If you want to see what your property might sell for when it comes time to assign your contract, talk with an agent who specializes in negotiating contracts after they have already been signed by both parties.

What happens to deposits paid by the original buyer (the assignor)?

• The deposit is usually returned to the assignor.
• The deposit is sometimes not returned to the assignor (typically if the buyer was a good one)
• The deposit is always returned to the original buyer if that person is still in contract with you and wants to take over as their own private party sale (PPS).

How do I find an end buyer for my property assignment?

There are several ways you can find an end buyer for your property assignment:

• Ask your real estate agent. Your agent should know of buyers interested in purchasing assignments, or at least be able to refer you to someone who can help.
• Ask your real estate lawyer (or real estate broker). Your attorney may also be able to refer you to a buyer’s attorney he or she knows and trusts personally, many lawyers have clients looking for properties like yours all the time
• Submit Your Assignment on Assign Today. Post your property on AssignToday.Com , lot of buyers are looking to take advantage of assignment sale via our website.

If you’re thinking of buying and selling a pre-construction home, you should understand how real estate assignment sales work.

In short: An assignment sale allows buyers who have already put down their deposits on a property to transfer their contract over to another buyer.

This means that while they are still legally obligated to complete the deal, they can make a profit by selling their right to buy the home at its current market value.

The seller will then go ahead with the original sale and collect an additional commission for facilitating this transaction.

While this might sound like an easy way for sellers to make money off of homes that haven’t sold yet (and potentially even get paid twice), there are some things you should keep in mind before taking advantage of real estate assignment sales yourself: you should connect with the Real Estate Professional who specializes in buying and selling preconstruction homes.

Meghna Negi

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

• (416) 443-9000
• [email protected]

Assignment Sale: A Guide

Looking at purchasing a pre-construction condo? You may have come across the term “Assignment”. Here’s the info on the Assignment Sale and some useful information you should know before you begin.

On This Page

• 1 What is an Assignment Sale?
• 2 How Does an Assignment Sale Work?
• 3 Assignment Sales: More Than Just Condos.
• 4 What to Look For in an Assignment Sale

What is an Assignment Sale?

An Assignment Sale occurs when a buyer successfully allows a third party to assume the rights and responsibilities of an Agreement of Purchase and Sale, prior to completion of the transaction.

The third party, known as the “assignee”, then completes the transaction with the original seller. The original buyer (assignor) is free of all obligations to the transaction.

Sales of Pre-construction condominiums typically begin years before construction & occupancy. Due to this protracted period of time, scenarios arise in which the original buyer doesn’t need or want the unit.

For example, the buyer may have:

• Encountered financial difficulty
• Moved to a new city, or
• Found a resale property instead

Assignment sales can be used as a means to profit via the market. For example, a buyer who is bullish on market conditions may begin by purchasing 3 pre-construction units. In the next year, the market rises to his favour, increasing the value of pre-construction units. He may then wish to list and sell two of those units, keeping only one for himself. In this scenario, the buyer has just made a profit from the two additional units & secured the base price in the building for himself.

How Does an Assignment Sale Work?

Not all builders will allow assignment sales. This is usually done to prevent “flippers” from purchasing the condo and reselling it prior to closing.

However, builders that allow assignments of pre-construction condos, will usually require that they are paid a portion of the difference.

Assuming the developer permits the assignment to occur, the seller will instruct the buyer to pay a sum of money on or before closing of the transaction. This sum is usually the difference between what the seller contracted to pay for the unit originally, and the amount that the seller has agreed to assign for.

The Seller then provides the buyer and developer with a “Direction Regarding Title”, allowing the property to be placed into the name of the new owner at the point of closing.

A prudent seller, when assigning a condominium, will also require the buyer and developer to sign a release which absolves the seller of all further liability.

Assignment Sales: More Than Just Condos.

Its important to remember that a buyer could assign ANY contract with a provision to do so. Resale homes, multi-residential investments, and condos, both pre and post-construction can all be assigned prior to closing.

This is important to understand when selling a home. A purchaser could sense an opportunity and contract your property with provisions for assignment. They could then assign the property to another buyer for a higher amount and pocket the difference.

Assignment sales, however, are not always profitable. Developers who price their condo based on market speculation at the time of occupancy may cause units to be overpriced. In the event the market takes a downturn, a potential assignment could be listed at less than the original purchase price. In this scenario, the initial speculative investor would lose money on their investment.

What to Look For in an Assignment Sale

If you’re looking to assign your pre-construction condo, its typical to ask for a deposit equal to that of what you may have paid to the developer, to ensure that your initial cost is recovered. The remainder of the payment terms can then be negotiated with your potential buyer.

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. Contact Us for more information regarding Assignment Sales and the pre-construction condo world.

Read More Posts on Our Blog

Browse below 👇.

Home Ownership

Property Law

Real Estate Investment

Understanding the Deal

Baron Alloway

More from the blog, we have to stop seeing the housing crisis as a “federal issue”, drake receives minor variance for fence height on bridle path home, the first-time home buyer incentive is a failure: here’s how to fix it, the trigger rate: explained, the official plan: what you need to know, is an investment condo right for you, leave a reply cancel reply.

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Pin It on Pinterest

• Print Friendly

Best of the Best

People's choice, for five consecutive years.

St Petersburg's Oldest Law Firm

We are the law firm that you call when you want the best attorneys at a fair and reasonable price. When you walk into court with one of our attorneys by your side, you will be treated differently. Our lawyers have spent their careers developing connections and insights that will help your case.

Let us use our skills and resources to serve you. We will evaluate your case for free and with no obligation. We want to be your trusted legal advisors for all matters. If we can’t handle your problem, we know the best lawyers to refer you to.

Please contact the award-winning attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. immediately.

Sean McQuaid Recognized as a “Notable Managing Partner” in Florida Trend Legal Elite’s 2024 Special Edition July 2, 2024

Seven Attorneys Recognized as Florida Super Lawyers for 2024 June 24, 2024

Battaglia, Ross, Dicus & McQuaid, P.A Welcomes New Attorney: Alec Waid February 23, 2024

Over 500 Awards & Recognitions

Over the decades, our lawyers have dedicated themselves to excellence in and out of the courtroom. Our list of our awards and recognitions verifies our results as six of our attorneys are named Super Lawyers ® . We have also been continuously nationally ranked by US News & World Report for decades as a tier one law firm.

Meet Our Attorneys

Who you hire matters. Over the past 60+ years, we have handled virtually every type of case across Florida- and won. This type of experience is priceless and there are very few, if any, law firms that can say the same. Our lawyers are known, liked, feared, and respected. We invite you to learn more about our team.

Sean McQuaid

Aubrey Dicus

Personal injury, criminal defense, litigation.

Jonathon Douglas

Personal injury, property damage.

Howard Ross

Business law, real estate.

Robert Kapusta

Real estate, estate planning, business law.

Caitlin Szematowicz

Litigation, appeals, employment.

Andrew Pardun

Hunter Rawls

Wills, trusts and estates; litigation, administration.

Ranger Jackson

Personal injury, criminal defense, civil litigation.

Bruce Marger

Estate planning, probate, elder law.

Kenneth Thornton

Real estate, banking, commercial finance.

Lama Alqasemi

Estate planning, probate & trust administration.

Civil Litigation, Commercial Litigation, Criminal Defense

Samara Ballard

Civil litigation, criminal defense, full service law firm, solutions to all of your legal needs since 1958.

When disputes arise, clients expect to be represented by attorneys with high quality legal skills. They also need lawyers that are sensitive to demands of the client’s business. We make it our goal to understand the client’s goal and to tailor our representation to a realistic resolution.

We understand that it is an extremely difficult time, and we’re here to help see you through it. Our experienced team of lawyers has handled countless criminal cases including drug crimes, DUI, domestic battery, weapon offenses, internet crimes and more.

We believe that your assets should be protected against creditors, predators, divorce, and even the poor decisions of your heirs themselves. We believe that you, not the government, should determine how your assets are distributed when you pass away.

We help clients who are facing foreclosure develop a defense that is specifically tailored to address their unique circumstances. Our law firm is experienced in navigating the confusing and ever-changing landscape of Foreclosure Litigation. 

Insurance companies rarely put your interests before their own. We frequently see insurers act in ‘bad faith’ or unfairly interpret policy wording to avoid paying money out. It is even more common for the insurance carrier to offer less than the true value of your claim.

Litigation is the core of the firm’s existence. We have over 50 years’ experience in both the State and Federal Court System and many of our litigation attorneys have been recognized for their outstanding work in the area of Commercial and Civil Litigation.

When you hire our firm, you will meet and speak directly to our experienced team of personal injury lawyers, not investigators or paralegals. What sets us apart from other firms is that our personal injury lawyers get to know you and your case.

We take on the challenge of holding insurance companies responsible for what should be paid to our clients for their property damage claims. Ensure your insurance company holds up its end of the bargain, with legal assistance from our property damage attorney team.

We have helped change the face of the entire west-central Florida region. Our real estate department represents and counsels property owners, developers, lenders and borrowers, and groups of owners such as condominium and homeowner’s associations (HOAs).

Following the death of a loved one, emotions can run high and suspicions raised, especially if several heirs are involved. Disputes about the legitimacy of a will or trust, theft of property, as well as the proper manner in which they should be implemented, can easily emerge.

Do St. Petersburg Companies Need an Operating License? July 16, 2024

Tips to Handle Drug Charges in St. Petersburg June 25, 2024

How to Recognize Concussion Symptoms After an Accident May 24, 2024

What Are the Rules on Short-Term Rentals in St. Petersburg? May 21, 2024

Can a Pre-Existing Condition Affect My Personal Injury Claim? April 30, 2024

3 Convenient Locations

To better serve you.

Battaglia, Ross, Dicus & McQuaid, P.A. 5858 Central Avenue St. Petersburg, FL 33707 Phone: (727) 381-2300 Fax: (727) 343-4059

Battaglia, Ross, Dicus & McQuaid, P.A. 136 4th St N #2233 St. Petersburg, FL 33701 Phone: (727) 381-2300 Fax: (727) 343-4059

Battaglia, Ross, Dicus & McQuaid, P.A. 12953 US-301 #102 Riverview, FL 33578 Phone: (813) 639-8111 Fax: (813) 964-3085

At Battaglia, Ross, Dicus & McQuaid, P.A., we represent clients from St. Petersburg, Florida, and throughout the surrounding areas, including Clearwater, Largo, Pinellas Park, Highpoint, Safety Harbor, Dunedin, Oldsmar, Tampa, Brandon, Bradenton, Riverview, Sarasota and throughout Pinellas County.

© 2023 by Battaglia, Ross, Dicus & McQuaid, P.A. All rights reserved.

Disclaimer | Privacy Policy | Sitemap | Terms of Use

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

© 2021 by Battaglia, Ross, Dicus & McQuaid, P.A. All rights reserved.

Free Consultation

Fill out the form below and we will get back will you shortly.  Fields labeled with an asterisk are required.

Select Which Area of Law ------------------ Business & Corporate Litigation Business & Corporate Transactions Criminal Defense Estate Planning Insurance Dispute Labor & Employment Litigation Personal Injury Property Damage Real Estate Title Insurance Will, Trust & Probate Other

Search Our Website

Enter some keywords into the search bar below and click the search icon

Insert/edit link

Enter the destination URL

Or link to existing content

• How It Works?
• frequently asked questions
• ASSIGNMENT SALE
• PRE CONSTRUCTION
• MORTGAGE BROKERS
• HOME EVALUATION
• PRIVATE LENDER
• 1 (416) 890-5604
• Create a Listing

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. 

Compare listings

Reset Password

Please enter your username or email address. You will receive a link to create a new password via email.

• Login / Register
• (778) 909-1305
• Professional Advice

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.

• Photo: @ irina88w via Canva.com
• Photo: @ AndreyPopov via Canva.com
• Photo: @ putilich via Canva.com

Post a Comment

Related posts.

Unlocking the Potential of a Vendor Take-Back Mortgage: How Seller Financing Works

Vendor Take Back Mortgages (VTB) offers an innovative financing solution that can be a game-changer for buyers and sellers in the real estate market.... Read More

Mortgage Broker or Bank: Navigating Your Best Path in Home Financing

Choosing between a mortgage broker and a bank for your home financing needs is a crucial decision. Whether you're eyeing the vibrant real estate ... Read More

Complexities of a Lien on the House: A Comprehensive Guide

Navigating the complex world of property liens can be daunting. Liens on a house represent a legal claim against a property, often resulting from ... Read More

We're Here to Help

• X (Twitter)

Have a Question or Want a Free Market Report?

• Advanced Search
• Search by Map
• Property Tracker
• Featured Listings
• Vancouver Island Communities
• Lower Mainland Communities
• Sunshine Coast Communities
• Thompson Okanagan Communities
• Kootenay Rockies Communities
• Cariboo Communities
• Northern BC Communities
• Mortgage Calculator
• Mortgage Pre-Approval
• First Time Buyers
• Making an Offer
• What Are Closing Costs?
• Financial Terms Glossary
• Personalized Home Search
• Factors to Consider When Moving to a New City
• Selling a Home
• Pricing Your Home
• Marketing Your Home
• Showing Your Home
• Adding Value
• Free Market Analysis
• Join Our Group

Real Estate Definition: Assignment Sale

When a buyer enters into a purchase agreement for a pre-constructed or newly built property, they may find themselves in a situation where they no longer wish to proceed with the purchase. In such cases, the buyer can assign their rights and obligations under the agreement to a new buyer – and this is where an assignment sale comes in.

What is an Assignment Sale?

An assignment sale refers to a sales transaction in which the original buyer of a property (“assignor”) transfers their rights and obligations of the Agreement of Purchase and Sale to another buyer (“assignee”) before the original buyer takes possession of the property. The assignee then becomes responsible for completing the deal with the seller. Essentially, an assignment clause allows the buyer to sell the property before they move in. While assignment sales can occur with both homes and condos , they are more common among buyers of pre-construction condos.

Factors to Consider Before Entering an Assignment Sale

While assignment sales can be advantageous, it is crucial for both the original buyer and the new buyer to consider certain factors before entering into such transactions.

Developer’s Consent

Before proceeding with an assignment sale, you must obtain the developer’s consent. Some developers may have strict rules or restrictions, and failure to comply can lead to legal complications.

Assignment Fees

The assignor may charge an assignment fee to the new buyer for transferring their rights and obligations. This fee can vary depending on the market conditions and the specific terms of the Assignor-Assignee Agreement.

Legal Advice

Both parties should seek legal advice before entering into an assignment sale. This ensures that all parties understand their rights, obligations, and potential risks associated with the transaction.

How Does an Assignment Sale Work?

Before proceeding with an assignment sale, the original buyer must obtain the consent of the developer or builder. This step is crucial as some developers may have specific rules or restrictions regarding assignment sales. When the developer consents, the original buyer can look for a new buyer to take over the purchase agreement.

Once there’s a new buyer, both the original buyer and the new buyer (assignee) enter into an agreement known as the Assignor-Assignee Agreement. This agreement outlines the terms and conditions of the assignment sale, including the assignment fee, if any. Then, the developer will review the Assignor-Assignee agreement and may require additional documentation or fees.

Once the developer approves the assignment sale, the closing process begins. At this stage, the new buyer is responsible for completing the purchase, including paying any remaining balance to the developer.

Why Do Assignment Sales Happen?

One primary reason why assignment sales happen is a change of plans. People may decide to leave the area due to personal circumstances such as starting a family, getting married, or looking for job opportunities elsewhere. Additionally, some individuals may face financial challenges that prevent them from completing the purchase.

Alternatively, a common scenario involves investors who never intended to close on the property acquisition. A popular investment strategy is to purchase a property during its early release to take advantage of the emerging market and low pricing and sell it before incurring land transfer taxes, HST, or becoming tied to a mortgage.

Benefits of Assignment Sales

Assignment sales can offer several benefits to both the assignor and the assignee. Some of these benefits include:

Profit Potential

For the original buyer, an assignment sale provides an opportunity to make a profit without completing the purchase. If the market value has increased since the initial purchase agreement, the assignor can sell their rights at a higher price.

Opportunity for Early Ownership

The assignee can benefit from an assignment sale to gain early ownership of a pre-construction property. This can be particularly appealing for individuals looking to invest in real estate or those with specific requirements for a new home.

Flexibility

Assignment sales offer flexibility to both parties involved. The original buyer can exit the purchase agreement without incurring significant penalties, while the new buyer can secure a property without going through the entire pre-construction process.

How a Real Estate Agent Can Help You Navigate this Process

Assignment sales are a complicated process; working with an experienced real estate agent who can help you navigate and understand the ins and outs of this transaction is crucial. These professionals can not only assist you in marketing your assignment, but they can also overcome any limitations imposed by the builder. Moreover, agents have a vast network and can easily connect you with an interested buyer. Although assignment sales may seem daunting, having a skilled lawyer and an experienced realtor is a smart financial move!

The post Real Estate Definition: Assignment Sale appeared first on RE/MAX Canada .

Owning a home is a keystone of wealth… both financial affluence and emotional security.

• Find a Lawyer
• Ask a Lawyer
• Research the Law
• Law Schools
• Laws & Regs
• Newsletters
• Justia Connect
• Pro Membership
• Basic Membership
• Justia Lawyer Directory
• Platinum Placements
• Gold Placements
• Justia Elevate
• Justia Amplify
• PPC Management
• Google Business Profile
• Social Media
• Justia Onward Blog

Saint Petersburg Real Estate Lawyers

• (813) 252-6789
• Offers Video Conferencing

• Pinellas Park
• Saint Pete Beach
• Treasure Island
• Pinellas County
• Hillsborough County
• Manatee County

Saint Petersburg Real Estate Legal Aid & Pro Bono Services

Bay Area Legal Services (800) 625-2257 St. Petersburg, FL

Community Law Program (727) 582-7402 St. Petersburg, FL

Related Practice Areas

Construction Law Foreclosure Defense Landlord Tenant

Researching Attorney Discipline

Find out whether an attorney has ever been disciplined.

Resources for Lawyers

• About Justia Lawyer Directory Badges
• Lawyer Directory FAQs
• Claim your Profile
• About Premium Placements
• About Justia Lawyer Rating and Reviews

There are no recently viewed profiles.

There are no saved profiles.

There are no profiles to compare.

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.

Latest Blogs

11 Jul 2024

Urban Toronto Condo Supply Stabilizes, Signalling End to Chaos

17 Apr 2024

How the 2024 Federal Budget Affects Toronto’s Real Estate Market

19 Dec 2023

Week 198: Here’s how recent inflation news will affect the Toronto Real Estate market.

• Developments

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

Related Articles

Why Now is the Time to Invest in a New Home in Milton & Nearby?

Finding the Best Pre-Construction Condo Investment Neighborhoods in Toronto

Luxurious Living: New Condos in Toronto’s Trendiest Neighborhoods

Why Pre Construction Condos in Toronto are Smart Investment Choice?

Record Highs Expected: Canadian Commercial Real Estate Investment to Reach $59B in 2023

Toronto’s Housing Crisis: The Urgent Need for Affordable Rental Units

Toronto’s Housing Market Expected To Turn Around In 2023

A big picture view of gta condos.

The Features And Benefits Of Condo Living

The Pickering Real Estate Market

The Greater Toronto Area Real Estate Market

Why Do Condos In Toronto Cost So Much? Here’s The Process

Pickering Real Estate Market

The Hamilton LRT And Condo Developments

GTA Housing Market Fundamentals

Ontario’s Housing Challenge: Single Family Homes, Yes, But What Else?

Penthouse, Loft, Luxury or Low-Rise? Learn The Differences And Pick The Right Condo For Yourself!

Solar Power Panels

Limits On Annual Rental Increase

The All New Mississauga LRT

How a Real Estate Lawyer Can Make or Break Your Dream Home

Niagara: Top Spot for Real Estate Investment

Real Estate in a Remote Working World

The Rising Sun of Rural Ontario

Real Estate Investment Plans for Increases in Domestic Students in Canada

Popular articles.

4 Reasons Why M City Condos 3 Is a Great Investment Opportunity

Four Reasons Why Prestige Condos Is a Great Place To Invest

How To Make Your Condo Kitchen Look Bigger and Better

5 Reasons Why Empire Phoenix Condos is a Must Buy

Condos HQ proudly announces the launch of Sugar Wharf Condos in Toronto

5 Important Questions to Ask Before Hiring a Realtor

Request more information.

March 22, 2024

Real Estate Definition: Assignment Sale

When a buyer enters into a purchase agreement for a pre-constructed or newly built property, they may find themselves in a situation where they no longer wish to proceed with the purchase. In such cases, the buyer can assign their rights and obligations under the agreement to a new buyer – and this is where an assignment sale comes in.

What is an Assignment Sale?

An assignment sale refers to a sales transaction in which the original buyer of a property (“assignor”) transfers their rights and obligations of the Agreement of Purchase and Sale to another buyer (“assignee”) before the original buyer takes possession of the property. The assignee then becomes responsible for completing the deal with the seller. Essentially, an assignment clause allows the buyer to sell the property before they move in. While assignment sales can occur with both homes and condos , they are more common among buyers of pre-construction condos.

Factors to Consider Before Entering an Assignment Sale

While assignment sales can be advantageous, it is crucial for both the original buyer and the new buyer to consider certain factors before entering into such transactions.

Developer’s Consent

Before proceeding with an assignment sale, you must obtain the developer’s consent. Some developers may have strict rules or restrictions, and failure to comply can lead to legal complications.

Assignment Fees

The assignor may charge an assignment fee to the new buyer for transferring their rights and obligations. This fee can vary depending on the market conditions and the specific terms of the Assignor-Assignee Agreement.

Legal Advice

Both parties should seek legal advice before entering into an assignment sale. This ensures that all parties understand their rights, obligations, and potential risks associated with the transaction.

How Does an Assignment Sale Work?

Before proceeding with an assignment sale, the original buyer must obtain the consent of the developer or builder. This step is crucial as some developers may have specific rules or restrictions regarding assignment sales. When the developer consents, the original buyer can look for a new buyer to take over the purchase agreement.

Once there’s a new buyer, both the original buyer and the new buyer (assignee) enter into an agreement known as the Assignor-Assignee Agreement. This agreement outlines the terms and conditions of the assignment sale, including the assignment fee, if any. Then, the developer will review the Assignor-Assignee agreement and may require additional documentation or fees.

Once the developer approves the assignment sale, the closing process begins. At this stage, the new buyer is responsible for completing the purchase, including paying any remaining balance to the developer.

Why Do Assignment Sales Happen?

One primary reason why assignment sales happen is a change of plans. People may decide to leave the area due to personal circumstances such as starting a family, getting married, or looking for job opportunities elsewhere. Additionally, some individuals may face financial challenges that prevent them from completing the purchase.

Alternatively, a common scenario involves investors who never intended to close on the property acquisition. A popular investment strategy is to purchase a property during its early release to take advantage of the emerging market and low pricing and sell it before incurring land transfer taxes, HST, or becoming tied to a mortgage.

Benefits of Assignment Sales

Assignment sales can offer several benefits to both the assignor and the assignee. Some of these benefits include:

Profit Potential

For the original buyer, an assignment sale provides an opportunity to make a profit without completing the purchase. If the market value has increased since the initial purchase agreement, the assignor can sell their rights at a higher price.

Opportunity for Early Ownership

The assignee can benefit from an assignment sale to gain early ownership of a pre-construction property. This can be particularly appealing for individuals looking to invest in real estate or those with specific requirements for a new home.

Flexibility

Assignment sales offer flexibility to both parties involved. The original buyer can exit the purchase agreement without incurring significant penalties, while the new buyer can secure a property without going through the entire pre-construction process.

How a Real Estate Agent Can Help You Navigate this Process

Assignment sales are a complicated process; working with an experienced real estate agent who can help you navigate and understand the ins and outs of this transaction is crucial. These professionals can not only assist you in marketing your assignment, but they can also overcome any limitations imposed by the builder. Moreover, agents have a vast network and can easily connect you with an interested buyer. Although assignment sales may seem daunting, having a skilled lawyer and an experienced realtor is a smart financial move!

More to Explore

Cheap and Simple Front Yard Landscaping Ideas

July 19, 2024

What Happens If I Can’t Pay My Mortgage?

July 18, 2024

Are Condos a Good Investment?

July 17, 2024

Decluttering Your Life Before Moving to a Smaller Home

July 16, 2024

5 Homes for Sale in BC Under $400,000

July 15, 2024

What You Need to Know About the Comox Valley Real Estate Market

July 14, 2024

Buying a Home with Tenants in Ontario

July 13, 2024

Everything You Should Know About Buying Vacant Land in Canada

July 12, 2024

Best Neighbourhoods in Charlottetown (2024)

July 10, 2024

Find the Right Agent

Sign up for our newsletter, next steps: sync an email add-on.

*RE/MAX, LLC, 5075 S. Syracuse St., Denver CO, 80237; RE/MAX Western Canada and RE/MAX Ontario-Atlantic, 639 Queen Street West, Toronto, ON M5V 2B7, 905-542-2400

• Semi-detached
• POTL Townhouse
• All listings
• Recent sales
• About AssignPal

Assignment Sale FAQ

The most detailed assignment sale guide in canada, most frequent questions and answers.

In order to understand what an assignment sale is, we’ll need to touch on pre-construction properties. Buying a pre-construction property means that you purchase a property before it’s ready, sometimes even before its construction has even begun. Building developers usually start pre-construction sales early on, meaning you can buy a condo in a coveted building and desirable area for a fairly reasonable price (sounds impossible, right?) – but here’s the catch, it won’t be ready for a couple of years. The upside is that it will most likely have appreciated in value by the time you receive it, making it a smart investment. As soon as you buy a pre-construction property, you are entering an agreement with the builder until the property is ready.

Now an assignment sale is when the original buyer of a pre-construction property sells their contractual interest in the property to a new buyer, meaning that they resell the pre-construction property before taking possession of it. The sale must be done before the original buyer takes registered possession of the home for it to be considered an assignment sale. As such, the second buyer (the purchaser of the assignment sale) is the one who completes the transaction with the original seller (the builder). To put it simply, it’s basically a purchase of the agreement between the builder & the original buyer, so that the new buyer automatically becomes the new owner of the property once it’s completed.

Since we’ve covered the assignment sale basics, let’s get more technical – the property being sold is still not registered with the land registry office and is probably still under construction. This makes it quite different from a regular sale, in more than one way. Let’s get into the main attributes that make this type of purchase unique.

When purchasing a property via assignment sale, there is usually a larger than normal deposit. The deposit in an assignment sale takes into consideration the deposit paid by the original buyer to the builder (usually 20%), plus additional profit that the seller is hoping to gain. Since the original buyer (now the seller of the agreement) is making a profit on the property above the downpayment already paid, these assignment sales can be very cash intensive – this is the single biggest deterrent for most buyers.

For instance, Buyer A purchases a pre-construction property from the developer of the project (the builder) for $500,000. Buyer A pays a 20% deposit ($100,000) over a two year span to the builder. Before the project is completed, Buyer A decides that they are no longer interested in going through with the purchase and would like to sell the unit, at this point (two years later) the market price of the property has now reached $550,000. Buyer A lists the unit for sale for $550,000, and the new buyer (Buyer B) would have to pay Buyer A their original deposit of $100,000 (20%), plus the property’s appreciation of $50,000. The total deposit that Buyer B will have to pay is $150,000 which, at this point, would be higher than the 20% usually required to obtain a mortgage on an investment property.

Another factor to keep in mind is that the assignment sale cannot take place without the builder’s consent. If you’re thinking of buying a pre-construction property only to then re-sell it as an assignment sale and turn a profit, this is definitely a factor worth considering. The builder reserves their right to hold back on consent for assignment sales and most only allow one assignment to be completed prior to final closing.

Therefore, as the buyer in an assignment sale, you’ll only be able to take over the original purchase agreement between the builder and Buyer A with the consent from the builder. This usually entails the builder requiring mortgage approval documents, ID, and additional information from the new buyer. Then there would be an assignment agreement executed between the builder, original buyer, and you (the new buyer). Needless to say, this is not the case with a regular sale – in a regular sale, the only consent you will need is that of your own and the seller.

Adding to the growing list of factors that make the assignment sale process different, showings do not exist here. Since, in most cases, an assignment sale is done before the building is even ready, the buyer is unable to physically see the property before purchasing it. As the buyer in an assignment sale, you’d be able to see floor plans, mock-ups, and images. In some cases, you’d also be able to head to the builder’s sales center and see/touch the finishes (eg. kitchen cabinets, countertops, tiles, appliances, etc.). You may also see the status of construction of the building by visiting the development site, to get an idea regarding the stage of project.

Since this requires a lot of trust, we recommend doing your research on the city’s reputable builders & the neighbourhood of the development to make sure its the right for you. It’s worth noting, however, that if the assignment sale is taking place during occupancy – when the original buyer has occupied the unit but is not yet in full possession of it – you might be able to see the unit in person.

Within the process of an assignment sale, you’ll find that there is additional paperwork (Builder’s consent, assignment agreement, etc.) and stages (occupancy closing, final closing, etc), which in turn leads to more legal hours. Lawyer fees for these types of sales are usually higher than a traditional sale because there are more contractual technicalities involving more than one party (Buyer A, the builder and Buyer B). Our advice would be to discuss these fees with your lawyer, in order to paint a more accurate picture of the what you can expect.

When buying a property via assignment sale, you are essentially buying a pre-construction property through a third party (Buyer A). With pre-construction properties, you get physical possession of the home (known as occupancy) before you get full possession of the home on paper (known as final closing). Therefore, occupancy fees are fees that you have to pay from the time you get possession of the home (occupancy phase) until the time you take official title of the property (final closing). Final closing usually occurs after the building is completed and has reached a certain percent of total occupancy. At final closing is when you would your mortgage would kick in. During the occupancy phase, you can expect the occupancy fees to be roughly the same amount as your mortgage payments would be with 20% down.

To add to what seems like the never-ending fine print, you might come across a number of additional fees when it comes time for final closing. Most contracts with a builder state that the buyer might incur additional costs that will only be specified upon final closing. The main additional fees are levies charges, also known as development costs; these are costs that the builder incurred while constructing the building, which they pass on to you as the buyer.

The size of these fees really depends on more than one factor: the builder, the city, and the project are a few to list. However, in most cases, you may have the builder set an upper cap limit on these fees – also known as Capped Levies. That way you know that the additional charges will be have a maximum upper limit that they wont exceed. Typically in Toronto, most developers cap development charges for one bedrooms to $7,500, $15,000 for two bedrooms, and over $20,000 for three bedrooms but please keep in mind that these are just ballpark numbers and the exact capped amount varies.

It’s essential to look at the original agreement between the assignment seller and the builder to see if levies are capped and at what amount. If the levies are not capped, you will have to assume the risk of higher-than-anticipated closing costs at the time of taking title to the property. Of course, there are also the common costs associated with homeownership which include land transfer taxes, legal fees, and possible mortgage fees.

Last but not least, it’s critical to consider HST (Harmonized Sales Tax) when buying via assignment sale, which essentially means you’re purchasing a pre-construction property. As a buyer, the HST of 13% in most cases is actually already included in the purchase price of the pre-construction property and the builder then applies for their rebate. However, it’s important to touch on the fact that buying a pre-construction property solely for investment may alter this structure.

If you are purchasing the property solely as an investor, and neither you or a direct family member will be occupying the unit, then you would have to pay the HST at final closing and apply for the New Residential Rental Property Rebate (NRRPR) after leasing the unit for one year. For more information regarding qualifications and the amount of the rebate, visit this publication from the CRA.

If you’re purchasing the assignment for yourself and it will be used as a primary resident then you’ll have to confirm that the HST is included in the purchase price of the assignment. For more information you may also visit the CRA’s info sheet here.

When it comes to HST and the status of your occupancy, you should always consult with your accountants and lawyers as each circumstance is unique.

Well, after much unbiased consideration, it’s safe to say that purchasing/selling on assignment can be a win-win scenario for both parties – the assignment seller gets a price above purchase price and the buyer, in most cases, snags a property below market price. Since assignment sales tend to occur well into the construction phase, there’s also less risk imposed on the buyer in an assignment sale. That being said, there are a number of reasons why a person might want or need to sell/buy a property on assignment:

Selling Reasons:

• Change of plans: since pre-construction homes can take years to be completed, the original buyer situation could have changed within that time. For example, the original buyer may have started a family and is now looking for a larger, more suitable home.
• Financial trouble: the financial situation of the original buyer may have changed over the years, and they’re now put in a position to have to sell the property. For example, the original buyer may have lost their job, meaning they can’t get qualified for a mortgage and are now unable to complete the purchase.
• Profit: it’s very common for investors to buy pre-construction homes with the aim of re-selling them to turn a profit. This is usually a common scenario for assignment sales in the Toronto real estate market.

Buyer Reasons:

• Brand new building/area: it can simply be that the purchaser is looking for a property that has never been occupied, or is in a newly developed neighbourhood, or just wants to secure a property in a new, buzz-worthy development. An example of this is Nobu Toronto.
• Below market price and less competition: since these purchases require at least 20% down-payment, in most cases it could be that these units have less competition and can be purchased at somewhat of a bargain.
• Profit: again, investors also look to buy properties via assignment sale because they believe that the building or neighbourhood will continue to appreciate in value, and come time of total completion or a few years later they would be able to sell for higher.

Looking to connect with us?

Not only are our agents top-tier — our technology and tools are, too.

HousePal Group

eXp Realty Inc., Brokerage

4711 Yonge St, 10th Floor, Suite A, Toronto, Ontario, M2N6K8

647-955-6014

Register for information on new projects

Get priority access to receive the best available floorplans and lowest pricing ahead of the general public.

Get started

Selling Real Estate

Mar 20, 2024

Everything You Need to Know About an Assignment Sale self.__wrap_b=(t,n,e)=>{e=e||document.querySelector(`[data-br="${t}"]`);let s=e.parentElement,r=B=>e.style.maxWidth=B+"px";e.style.maxWidth="";let o=s.clientWidth,u=s.clientHeight,a=o/2-.25,c=o+.5,p;if(o){for(r(a),a=Math.max(e.scrollWidth,a);a+1 {self.__wrap_b(0,+e.dataset.brr,e)})).observe(s):process.env.NODE_ENV==="development"&&console.warn("The browser you are using does not support the ResizeObserver API. Please consider add polyfill for this API to avoid potential layout shifts or upgrade your browser. Read more: https://github.com/shuding/react-wrap-balancer#browser-support-information"))};self.__wrap_b(":R1aijl6:",0.75)

6 minute read

In real estate, there are a number of different types of transactions that come with their own unique benefits and challenges. People are most familiar with a standard purchase or sale of a home that already exists (ie. a resale property). However, the exchange is quite different when someone decides to buy a pre-construction home (typically from a builder) that hasn’t been lived in. A further nuance is an assignment sale, which can occur in both the resale and pre-construction space.

With all that said, assignment sales aren’t widely understood and can often be confusing for those venturing into them. That’s why we put together this comprehensive guide on assignment sales in Ontario! If you find yourself reading this, it's likely you're seeking a deeper understanding of what assignment sales are, their significance, and how they can impact both buyers and sellers. In this blog, we aim to answer all your questions about assignment sales and their nuances. 

Understanding Assignment Sales

First things first, what exactly is an assignment sale? It's like passing the baton in a relay race before the finish line. In real estate, this means the original buyer (assignor) transfers their rights to buy a property to someone else (assignee) before they officially own it. The transfer allows the assignee to take over the assignors rights and obligations outlined in the Agreement of Purchase & Sale (APS). Assignments usually happen in pre-construction projects but can occur in other types of property transactions too. Put simply, an assignment enables the buyer of a home to sell the home before they take ownership of it. 

Why Assignment Sales Happen

Assignment sales can take place for a whole suite of reasons, but typically they occur when the buyer's personal circumstances have changed. This could be related to their financial circumstances, lifestyle changes, work relocation, etc. Especially when it comes to pre-construction, a commitment to purchase typically happens well in advance of the move in date. This leaves a lot of time for things to change for the buyer, potentially requiring them to exit the deal before the closing date. An assignment presents them with a great way to transfer responsibility of the APS to another individual, without having to incur the penalties that might come with trying to back out of the purchase altogether. 

For an assignee, an assignment can be an attractive way to purchase a property. They may be able to take advantage of a drop in value of the property since the assignors purchase or they may have just missed the opportunity to buy the property in the first place. Either way, an assignment provides them the right to purchase a property in a way that is beneficial to them.  

The Process of an Assignment Sale

Imagine you've agreed to buy a brand-new condo that's still under construction. Unfortunately, sometimes life just happens, and you decide not to go through with the purchase. Enter the assignment sale. Here's how it unfolds:

Original agreement: You've signed on the dotted line to purchase the condo.

Change of heart: For whatever reason, you opt not to finalize the purchase.

Finding a new buyer: You find someone who wants to take over your agreement.

Sealing the deal: You both sign an assignment agreement, transferring your purchasing rights to them.

Closing time: The new buyer finalizes everything with the developer.

This process might sound straightforward, but it's laden with legal, financial, and contractual nuances that need careful navigation. This is why it’s essential you engage a real estate lawyer as soon as possible in the process. They’ll be able to advise you on your legal rights and obligations that come with an assignment. 

Advantages of Assignment Sales

So, why consider an assignment sale? For sellers, it's a graceful exit from a property purchase, possibly with a profit if the property's value has increased. Buyers, on the other hand, can snag properties in developments that are no longer on the market or have appreciated in value since their initial sale.

Challenges and Considerations

But it's not all rainbows and butterflies. Assignment sales come with their own set of challenges. There are legal hoops to jump through, financial implications such as taxes and fees, and the ever-present risk of deals not going as planned. This is a legally binding contract so both parties need to do their due diligence and, most importantly, seek professional advice. This includes advice from a real estate agent, real estate lawyer, and a tax professional. While that all might sound expensive, not getting the right advice before committing to an assignment could turn out to be much more costly. 

There have also unfortunately been some bad actors in the assignment space in the past. The good news is that regulators have stepped in to provide better oversight in the space in order to protect consumer, but no regulator is perfect. This just emphasizes the importance of engaging multiple professionals in your assignment, to ensure that you’re getting unbiased and valuable advice.

Navigating the Market

The assignment sales market is a vibrant and ever-changing landscape, heavily influenced by geographic nuances and existing market conditions. This variability means that opportunities for assignment sales can differ significantly from one region to another, often reflecting the local demand for real estate, economic stability, and the pace of new development projects. For individuals keen on exploring assignment sales, whether as potential buyers or sellers, understanding these regional market dynamics is essential.

One effective strategy for identifying great assignment sale opportunities involves monitoring developments that have reached their sales capacity. Sold-out projects often indicate a high demand for properties within a particular area or development, making assignments from these projects particularly appealing to those looking to enter or invest in these sought-after locales.

Not to keep harping on the need for guidance and expertise when navigating the world of assignments, but I’m going to! The specialized nature of assignment sales requires real estate professionals who possess a deep understanding and experience in this specific segment of the market. Real estate agents who specialize in assignment sales can offer invaluable insights, facilitate connections between buyers and sellers, and navigate the complex regulatory and contractual landscape associated with these transactions.

Assessing the value and potential of an assignment sale requires a comprehensive approach. Potential buyers should conduct thorough due diligence, including reviewing the original purchase terms, understanding any restrictions or conditions imposed by developers, and analyzing current market trends to gauge the property's potential for appreciation. For sellers, determining the right price point and understanding the best timing to enter the market are crucial steps in maximizing returns on their investment.

Wrapping Up

And there you have it—a comprehensive guide to navigating the waters of assignment sales. Whether you're looking to buy or sell, understanding the ins and outs of these transactions can make all the difference. So, consult with professionals, do your due diligence, and who knows? Your next real estate adventure might just be an assignment sale.

At Doormat , we have experienced real estate lawyers that can help you navigate the tricky world of assignments. We can also support you with your standard property purchases, sales, refinances, ownership changes, and status certificate reviews. If you have any questions, reach out !

Co-founder and COO

Related blog posts

Mar 1, 2024

Understanding the SC Escape Clause in Real Estate Transactions

Navigating the world of real estate transactions can feel like deciphering an ancient script. The process isn't entirely straightforward and there are a ton of clauses and terms that can be long-winded and unclear. Among the many clauses and terms, the Seller's Concession (SC) Escape Clause stands out as a noteworthy mention. As both a buyer and a seller, it’s an important clause to understand, so we break it down in this blog.

Buying Real Estate

Mar 8, 2024

Navigating the Waters of Canada's Anti-Flipping Tax: What You Need to Know

Welcome to our deep dive into one of the hottest topics in Canadian real estate: the anti-flipping tax. As housing markets across the country continue to evolve, the federal government introduced this tax measure in the 2022 budget and it came into effect as of January 1, 2023. The aim of the tax is to cool down speculative real estate transactions in order to help address ongoing housing affordability concerns. Whether you're a seasoned investor or considering your first property venture, understanding the ins and outs of this tax is crucial. Let’s unpack what it means for you.

Feb 16, 2024

Why You Shouldn't Do Same Day Property Closings

The idea of closing on your property sale and immediately purchasing a new home on the same day can seem like a streamlined, efficient approach. At first glance, it sounds like a seamless transition from one home to another without the hassle of temporary housing and/or bridge financing. The problem is, this strategy is filled with complexities, risks, and unexpected challenges that can turn what seems like a convenient solution into a stressful experience. 

• Coaching Team
• Investor Tools
• Student Success

Real Estate Investing Strategies

• Real Estate Business
• Real Estate Markets
• Real Estate Financing
• REITs & Stock Investing

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.

Click the banner below to take a 90-minute online training class and get started learning how to invest in today’s real estate market!

What is an STR in Real Estate?

Wholetailing: a guide for real estate investors, what is chain of title in real estate investing, what is a real estate fund of funds (fof), reits vs real estate: which is the better investment, multi-family vs. single-family property investments: a comprehensive guide.

A Guide to Pre-Construction Assignment Transactions

The process of “assigning” an interest in an agreement of purchase and sale is a relatively new concept in Waterloo Region and it is quickly gaining traction. The problem is that the average purchaser does not understand the intricacies of what is involved in order to successfully assign an interest in an Agreement with minimal tax implications. A further problem is that the form of the Assignment Agreement is quite complex. The purpose of this article is to break down an assignment transaction into a scenario that is frequently encountered by real estate lawyers and agents. 

In 2016, John (the “Assignor”) signs an Agreement of Purchase and Sale (the “Agreement”) to purchase a new condominium unit from Builder X (the “Builder”). He purchases this unit for $300,000.00 and, over the course of a year, he puts down a $45,000.00 deposit. The unit is scheduled to be completed in 2020. John predicts, that by the time the unit is built, it will be worth more than the $300,000.00 he originally paid. In 2019, John notices that the housing market in Waterloo Region is changing dramatically, that the Region has gained attention as a real estate hot spot and that John could stand to make a large profit if he sold his unit to a third party. Acting on these circumstances, John “assigns” his interest in the Agreement to Bob (the “Assignee”) for $380,000.00. In this process, Bob effectively steps into John’s shoes as the purchaser under the original Agreement with the Builder. 

John needs assistance to ensure that he assigns his unit properly. John, being a prudent purchaser, asks his real estate lawyer to review the original Agreement between John and Builder X to confirm whether the Agreement contains specific language which prohibits or restricts John from assigning the Agreement to Bob, and whether John can assign the Agreement without obtaining prior written consent from Builder X. Spoiler alert: most pre-construction agreements contain this prohibition. In fact, most pre-construction agreements will contain wording to the effect that consent may be “unreasonably and arbitrarily withheld” by the builder or consent may be “at the builder’s sole and unfettered discretion”. In the event that written consent is provided, the builder will likely collect a fee for authorizing the assignment, prohibit any subsequent assignments and insist that the original buyer remain on the hook until final closing if the Assignee, Bob in this case, fails to complete the transaction with the Builder.

It is fortunate that John engaged his real estate lawyer prior to finalizing his transaction with Bob. John has discovered that Builder X will charge John a fee of $5,000.00 to authorize the assignment.

John’s lawyer has also flagged another concern: John’s initial deposit AND his profit may be taxable by the Canada Revenue Agency (“CRA”). Let’s explore why John’s lawyer believes the assignment transaction is taxable. Whether an assignment is taxable or exempt from HST turns on the status of the Assignor as a “builder” for HST purposes. If the Assignor (in this case, John) is considered to be a “builder”, the Assignor will be required to collect and remit HST on the markup earned through the assignment (in this case, $80,000.00). Exactly how does the CRA make this determination? The CRA looks at intention. In investigating the Assignor’s intention, it is necessary to look at the Assignor’s circumstances at the time the original Agreement was signed. 

The CRA will look at several factors in determining John’s intentions. Here are a few:

• Is the Assignor a corporation?
• Does the Assignor take action to attract buyers while the property is under construction?
• How is the Assignor financing the purchase?
• Has the Assignor entered into multiple Agreements to purchase multiple units at around the same time?
• Is the Assignor’s stated intention to occupy the residence supported by his/her circumstances?
• Is the Assignor’s pattern of activity such that occupation of the property demonstrates that his/her use will not be permanent?
• Was the assignment triggered by an unforeseen and intervening event?

John’s lawyer determines that John’s primary purpose of purchasing the unit was to sell his interest in the unit to a third party.  John lives and works in Toronto and is married with 4 children. The condominium unit he agreed to purchase from Builder X is in the heart of Uptown Waterloo – a stunning 600 Sq Ft studio. While John did not construct the unit, for GST/HST purposes, he is considered to be a builder as he was “intending to sell the property or an interest in it or to lease the property”. John doesn’t see how he can alter his circumstances to support an alternative intention. John is second guessing whether he should proceed with this assignment transaction as his profit margin is quickly declining. 

Fortunately, John’s lawyer has a solution. John’s lawyer recommends to John that the assignment agreement should be worded such that HST is “in addition to” the assignment price as the transaction is subject to HST. John’s lawyer also adds a clause into Schedule “A” of the assignment agreement to confirm John’s intent to sell or lease the property. John is happy again.

Let’s revisit our scenario and think about what we’ve just discovered. The initial deposit is $45,000.00. John wants Bob to reimburse him for the deposit paid to Builder X. John also wants $80,000.00 (the “Assignment Fee”) from Bob in exchange for Bob taking John’s place as purchaser under the Agreement with Builder X. The total consideration is therefore $125,000.00 and all of it (yes, all of it – not just the profit but the deposit as well) is subject to taxation. Now Bob is unhappy.

Bob is concerned about HST. Bob engages his own lawyer. Bob’s lawyer reconfirms the HST implications in relation to the Assignment Fee and informs Bob that the Assignment Fee does not reflect his total financial obligation as the Assignee. Bob is a player in two distinct transactions:

• Transaction #1 = Bob’s Assignment from John
• Transaction #2 = Bob’s Purchase with Builder X

Bob’s lawyer reminds Bob that by entering into an Assignment Agreement, he is stepping into the shoes of John as the purchaser. Bob is assuming the original purchaser’s financial obligations under the Agreement with Builder X, however, Bob has no opportunity to renegotiate any of the terms of the original Agreement. Bob’s lawyer wants to review the original Agreement, any amendments and notices to the Agreement and Builder X’s disclosure package. Bob’s lawyer brings the various closing adjustments to Bob’s attention. Bob will be on the hook for another $37,200.00 in adjustments to Builder X according to his lawyer’s estimations. 

That’s not all. Bob’s responsibility to pay Land Transfer Tax (“LTT”) is also increased. In addition to paying LTT on the original purchase price of $300,000.00, Bob will also have to pay LTT on the Assignment Fee under the Assignment Agreement. Now Bob is very unhappy.

Bob’s lawyer has a recommendation for Bob. He suggests that Bob take advantage of the HST New Housing Rebate (“New Housing Rebate”). Bob already knows about this rebate. Bob is aware that under most new construction agreements it is assumed that the purchaser qualifies for the rebate and therefore the purchase price is listed as inclusive of the rebate for marketing purposes. In doing so, the builder fronts the rebate as a credit to the purchaser and applies to CRA following closing in order to recover the rebate from CRA. What Bob does not know is that if he submits a rebate application after completing his purchase with Builder X (as opposed to in conjunction with the transaction with Builder X), he will be able to claim the rebate over the Assignment Fee as well. If the Assignee meets the qualifications of the New Housing Rebate, the Assignee can recover from CRA a rebate for up to $24,000.00.  Bob’s lawyer also tells him that only one New Housing Rebate application can be filed per dwelling. 

To qualify for the New Housing Rebate, the applicant must: 1. Intend to acquire the property as a primary place of residence; 2. the property must never have been occupied prior to title transfer; and 3. the applicant (or their relative) must occupy the property continuously for a minimum of one year.

Bob’s lawyer concludes that Bob would benefit from applying for the New Housing Rebate on his own following the completion of the purchase transaction. Bob would be eligible for a rebate of $22,243.35 on the original Agreement price of $300,000.00. However on $380,000.00, the Assignment price, Bob’s rebate would increase to the maximum amount available: $24,000.00. Bob will recover an additional $1,756.65 if he applies for the rebate on his own. Bob is happy again! 

As lawyers, it is important to ask our clients detailed questions prior to waiving a “lawyer review” condition in an agreement. Here is a list of questions a prudent lawyer would ask when presented with an assignment agreement:

• Has the Assignor provided the Assignee with the builder’s written consent to authorize the assignment agreement? 
• Have the parties determined who will be responsible to pay any assignment fees if such are due to the builder?
• Is the Assignor’s deposit with the builder in good standing? 
• If not, has the Assignor made arrangements to bring the deposit into good standing including any applicable NSF charges?
• Has the Assignor contracted with the builder for any upgrades to the property that have not yet been paid as of the date of entering into the Assignment Agreement?
• Is the Assignee permitted to contract for any additional upgrades with the builder?
• Does the Assignment Fee include the cost of the upgrades contracted for to date? 
• Does the Assignment Fee include the cost of any “incentives” offered by the builder to the Assignor under the original Agreement? Are these incentives transferrable to the Assignee?  
• Has the Assignee reviewed the disclosure statement and original Agreement? Has the Assignee noted the additional adjustments that may be payable to the builder upon final closing and is the Assignee aware that such adjustments are the Assignee’s responsibility?
• Has the Assignor provided the Assignee with all amendments, waivers and notices as provided by the Vendor?
• Has the Assignee ensured with its lender that the Assignee will qualify for financing to complete the transaction? 
• Has proof of the Assignee’s financing been provided to the Assignor and to the Vendor?
• Does the Assignee qualify for the New Housing Rebate?
• Has the Assignee obtained confirmation from the builder that the Assignee will be credited with the New Housing Rebate on the builder’s statement of adjustments if the Assignee qualifies for rebate? 
• Is it in the Assignee’s best interest to collect the New Housing Rebate through the purchase transaction?
• Have the parties agreed when the Assignment Fee will be paid by the Assignee to the Assignor? Will it be at completion of the purchase transaction or at the time the Assignment Agreement is accepted?

So, what happens to John, Bob and Builder X? After conferring with their respective lawyers and after serious negotiation, the parties agree as follows: Bob will purchase John’s interest in the unit for $380,000.00 + HST as further set out in Schedule “A” of the Assignment Agreement. John agrees to assume responsibility for HST on the deposit to be recovered ($45,000.00) from Bob. Bob agrees to remit HST on the $80,000.00 Assignment Fee. As Builder X has had little dealing with Bob to date, Builder X is happy to add the potential rebate amount ($22,243.35) back into the sale price of the unit ($300,000.00). Out of caution, Builder X’s consent to permit the assignment continues to hold John liable to complete the transaction in the event that Bob fails to do so. Bob completes both transactions and applies for the New Housing Rebate post-closing. 

Related Team

Slonee Malhotra

[email protected]

519.749.4606

Related Services

• Commercial Real Estate

Recent Knowledge

Overtime pay on the rise, collaborative family law, estates pitfall: former spouses and beneficiary designations.

Lead Gen and Marketing

API and List Builder

Multi-line Power Dialer

Premium PPL Service

Find distressed properties with driving for dollars.

Search for leads based on your ideal customer.

Analyze properties and identify the best opportunities.

Access the industry’s most accurate property and owner data.

Engage directly with property owners.

Power your websites and applications.

Uncover on and off market investment opportunities.

Close deals faster with higher quality leads.

Perfect listings and cash buyers at your fingertips.

Identify motivated borrowers before they shop around.

Beat the competition by reaching decision makers first.

Wow your referral partners with industry-leading property data.

Fuel High-Performing Marketing Campaigns.

Personal advice and insights from industry leaders

• Resources Education Batch TV Blog Courses Events & Webinars Tools FAQ Help Center Integrations Support Community Partner with Us Our Partners

Mastering Assignment Contracts for Wholesaling Real Estate: A Step-by-Step Guide

• Blog , Wholesaling Real Estate
• Published on June 18, 2024

Home » Mastering Assignment Contracts for Wholesaling Real Estate: A Step-by-Step Guide

If you’re diving into the world of wholesaling real estate, mastering assignment contracts is crucial. These contracts are the linchpin for wholesalers looking to facilitate property deals without purchasing the property themselves. Assignment contracts allow the transfer of purchasing rights to another buyer, offering the potential for profit with little upfront capital. In this article, we strip away the complexities surrounding these contracts and lay out a step-by-step guide to using them effectively. We’ll cover everything from the basic structure and legal compliance to overcoming common obstacles and marketing your deals.

Key Takeaways

• Assignment contracts are a low-risk real estate investment strategy allowing wholesalers to earn a fee by transferring their right to purchase a property to a cash buyer.
• Effective assignment contracts must include clear definitions of the parties involved, precise property descriptions, and detailed financial terms to ensure legality and prevent disputes.
• Wholesalers must navigate legal compliance, establish clear contingencies, and build relationships with both motivated sellers and cash buyers to successfully wholesale properties through assignment contracts.

Exploring the Basics of Real Estate Assignment Contracts

Picture this: you’ve discovered a property ripe for investment but lack the funds to make the real estate purchase. Enter the real estate assignment contract—a legal document that becomes your golden ticket in such scenarios. As a property owner, a wholesaler can flip a contract to a cash buyer and pocket a fee in the process by securing the exclusive right to buy a property. It’s like holding a reservation you can sell at a premium to someone eager to take your place.

This method allows for wholesale real estate investing with minimal financial risk and positions you as a key intermediary. You’re the maestro, orchestrating a deal between the hopeful seller and the ready real estate investor, all the while keeping your eyes on the prize (an assignment fee ) that reflects your ability to spot and secure a promising lead.

The Structure of an Effective Assignment Contract

An assignment contract is more than just a handshake and a promise; it’s a meticulously crafted document that sets the stage for a successful and legally sound real estate transaction. At its core, it should clearly define:

• The rights and obligations being transferred
• The financial terms
• A detailed description of the property
• All bound by the consent of the parties involved

The purchase agreements serve as the deal’s blueprint, promoting clarity and confirming that all parties agree before proceeding.

Creating an Assignment Contract

When creating an assignment contract, it’s best to work with an attorney who’s well versed in the laws and regulations around real estate wholesaling in your state. Wholesalers who try to cut this corner by using a contract they found online can experience problems later if it’s a poorly written contract or one that’s written for a market with different regulations. 

In order to create an assignment contract, you must first find quality leads and then get in touch with the homeowner to agree on terms offered and sign the deal. The purchase deal, also referred to as a wholesaling contract, states that the wholesaler has the right to buy the property. 

When the wholesaler secures an cash buyer who is interested in buying the property, the two parties enter into a real estate assignment contract. This contract transfers all obligations from the wholesaler to the buyer. The same terms outlined in the purchase deal carry over to the buyer except for the price of the property. 

The key elements of an assignment contract are: 

• A copy of the original wholesale contract or purchase deal
• The legal names of the buyer and seller
• The property’s street address, type of property, and assessor’s parcel number (APN)
• The physical condition of the property, including any defects and repairs
• The purchase price as well as specifications regarding financing and deposits (if applicable)
• The closing date
• Any contingencies

Here is a basic example of an assignment contract agreement, which will help guide you understand better as you read through.

Identifying the Contract Parties

When it comes to assignment contracts, it’s a trio performance featuring the assignor (you, the wholesaler), the assignee (the end buyer), and the original seller. As the wholesaler, you’re the pivotal figure, holding the rights to purchase which you intend to pass on to the assignee. The end buyer, or assignee, steps into your shoes, adopting all the benefits and responsibilities of the original purchase agreement. And let’s not forget the original seller , who kicked off this chain by agreeing to sell the property.

Describing the Subject Property

A blurry property description can turn a promising deal into a legal quagmire. That’s why the contract must paint a clear picture of the property in question, with no detail left to the imagination. A precise legal description lays the foundation for a binding contract, one that leaves no room for disputes about what’s being bought and sold.

Every detail, from lot measurements to included fixtures, adds to the property’s value and enhances the appeal of the deal. Overlooking the specifics of what stays and what goes can lead to misunderstandings and, worse, devalue the very asset you’re aiming to profit from.

Determining the Financial Terms

Money talks, and in real estate, it speaks volumes. The assignment contract must clearly spell out the financial obligations of the parties involved, starting with the earnest money deposit—a show of good faith from the assignee that guards you against a change of heart. Then there’s the assignment fee, which can fluctuate based on the property’s appeal and the buyer’s willingness, but expect to negotiate around the $5,000 mark as a benchmark.

Legality and Compliance in Assignment Contracts

Diving into the legal depths of assignment contracts, one must navigate the waters of legality and compliance with a keen eye. A contract is only as strong as its adherence to the law and clarity in its terms. The parties involved must be competent, not just in making decisions but also in the eyes of the law—of age and of sound mind. The contract must stand up to legal scrutiny, aligning with local laws and avoiding the murky areas of illegal activities or unconscionable demands.

Securing the services of a real estate attorney as earlier mentioned and in some states a real estate agent with a real estate license is a crucial step. They are the seasoned guides who can steer you through the complexities of real estate contracts and ensure that your agreement meets all necessary legal standards, from the statute of frauds to the finer points of state and local regulations.

Executing a Real Estate Assignment Contract

The execution of an assignment contract signals the culmination of all your groundwork, where the documents are signed, and the promises made on paper transmute into concrete actions. This critical juncture is not just about making it official; it’s also about ensuring that your interests as a wholesaler are buttoned up, protecting you once you’ve handed off the baton to the end buyer.

Preparing for Closing

The closing is the grand finale, and preparing for it means leaving no stone unturned. The closing date should be circled in red, signaling the day when the property changes hands and the profits are realized. However, the buyer’s ability to close the deal is the bedrock upon which your assignment contract rests.

Contingencies are your safety net, allowing you to bow out gracefully should the deal hit a snag before the closing date. And let’s not forget closing costs – knowing who bears the brunt of these fees can influence the deal’s structure and the smoothness of the final act.

Overcoming Obstacles in Assignment Contract Wholesaling

The path to successful wholesaling is often uneven; it’s filled with obstacles that can challenge even the most experienced wholesalers. From restrictive contracts that forbid assignment to financial contingencies that can snarl up transactions, these hurdles require strategic maneuvering and a keen understanding of the wholesaling landscape.

Dealing with Non-Assignable Contracts

Encountering a non-assignable contract requires innovative thinking. Some contracts leave no room for direct assignment, but that doesn’t mean you’re at a dead-end. You can resort to using a Standard Contract Assignment Addendum to circumvent restrictions or, when all else fails, execute a double closing, briefly taking title before passing it along to the end buyer.

Mastering wholesaling through assignment contracts involves:

• Navigating a path that requires minimal initial capital but offers numerous profit opportunities
• Connecting motivated sellers with cash buyers
• Crafting contracts that are as bulletproof as they are profitable
• Overcoming challenges with grit and ingenuity

It’s a journey that can be highly rewarding for those who are willing to put in the effort. Wholesaling real estate is an entry point into the property market, but it’s also a test of one’s ability to understand and adapt to the real estate landscape, where continuous learning is non-negotiable. Check out our Free training on Real Estate Investing to know more.

Frequently Asked Questions

What exactly is a real estate assignment contract.

A real estate assignment contract is a legal agreement that allows an investor to transfer their rights and obligations under a property purchase agreement to another party, typically for a fee, often used in wholesaling to earn a profit without purchasing the property outright.

How does a wholesaler make money with an assignment contract?

A wholesaler makes money by negotiating a purchase price with a seller and then assigning the contract to an end buyer for a higher price, pocketing the difference as their profit, also known as the assignment fee.

Do I need a real estate license to wholesale properties using assignment contracts?

No, you generally do not need a real estate license to wholesale properties using assignment contracts, but it’s important to understand local regulations and work with a real estate attorney for legal compliance.

Can all real estate contracts be assigned to another party?

No, not all real estate contracts are assignable as it depends on the contract terms, some contracts may have clauses that forbid assignment or require seller’s consent. Make sure to review the terms or use a standard contract assignment addendum if needed.

What are some common obstacles in wholesaling with assignment contracts?

Some common obstacles in wholesaling with assignment contracts are non-assignable contracts, financing contingency hurdles, legal competence of parties, and navigating state and local laws. Solutions may involve double closings, contract addendums, and seeking legal advice.

Tags for This Post

• Assignment Contract , wholesaling real estate

Join more than 10,000 real estate pros

Suggested Articles

• Blog , Real Estate Investing

How To Find Hidden Real Estate Deals with MLS Keyword Search.

FSBO Listings : A Guide for Real Estate Wholesalers and Investors to Find Hidden Deals

What Are Tax Delinquent Properties: A Guide for Potential Investors

Get the latest from BatchLeads

Why BatchLeads

Role solutions.

Terms of Service   |   Privacy Policy   |   Personal Information

©BatchLeads 2024. All rights reserved.

For subscribing to BatchService Newsletter!

• New Condos for Sale
• Platinum Access
• Resale Homes
• Real Estate Info
• Buyer’s Journey
• Online Condo Presentation
• Leasing Services
• Calculators
• Clients Stories
• City / Town
• Near Major Intersection
• Near Subway Stations
• Move In 2022
• Move In 2023
• Move In 2024
• Move In 2025
• Move In 2026
• Move In 2027
• Move in 2028
• Move in 2029
• Move In 2030

Boutique Condos

• Detached Homes
• Special Promotion

5% Down Condos

10% Down Condos

• Condos Coming Soon

Master-Planned Communities

Assignment Listings

• Near Urban Growth Centres
• Near Rapid Transit
• Near Major Intersections
• Richmond Hill
• King Township
• Scarborough
• Bowmanville
• Mississauga
• Halton Hills
• Springwater
• Wasaga Beach
• Collingwood
• All Locations
• Move In 2029

Important Update: Our Investment Presentation Seminar is now available twice a week. Learn More

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.

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.

Check Out These Helpful Buying / Investing Articles…

• Why Pre-Construction Condos Are the Best Investment
• Most Frequently Asked Questions
• Why Buy With a Platinum Agent
• Interim Occupancy and Final Closing
• Steps to Buying a Pre-Construction Condo
• Renting vs Buying
• Condo Investments
• Pre-Construction Condo Closing Costs
• Pre-Delivery Inspection
• Statement of Critical Dates
• Condo Project Cancellations
• First Time Home Buyer Incentive
• Community Benefits Charges
• Glossary of Real Estate Terms and Definitions
• How Condo Developers Determine Price Per Square Foot
• Section 37 Levies
• 10 Day Cooling Off Period
• Development Charges and Levies
• Important Documents to Review When Purchasing a Pre-Construction Condo
• Land Transfer Tax
• Condominium Registration
• Condominium Corporations
• Condo Reserve Fund
• Inclusionary Zoning
• Common Elements
• Raising Issues With The Condo Board
• Condominium Management
• Requesting Condominium Records
• Meetings and Voting In A Condo Corporation
• Condominium Insurance
• Renting Your Condo Unit
• GST/HST New Housing Rebate
• What Are Interest Rates?
•  Everything You Need to Know about Mortgages
•  What Is the Ontario New Home Warranty Program?
•  Deposit Structures for Pre-Construction Condos
•  What Are Condo Maintenance Fees?
• Do I Need a Property Manager?
• How to Find Qualified Tenants for Your Rental Property
• What Are Buyer Incentives?
• What Are The Motives For Investing in Real Estate?
• What is Title Insurance?
• What is Delayed Occupancy?
• How to Pay Off Your Mortgage Faster
• First Home Savings Account (FHSA
• Landlord and Tenant Rights and Responsibilities
• The Best Building Amenities for Your Condo Investment
• How to Read Condo Floor Plans
• How Real Estate Pricing Has Changed In the Last Four Decades
• Local Area Amenities That will Increase Your Condo Investment Value
• Invest in Real Estate for Wealth and Retirement
• The Home Construction Regulatory Authority (HCRA)
• What to Consider When Selecting the Ideal Condo
• Residential vs Commercial Mortgages
• How To Choose the Right Condos Floor Plans
• What to Look For in a Condo Developer
• Renting to Student Tenants

Read more Buying/Investing articles

NEW CONDOS IN THE GTA

Toronto New Condos

North York New Condos

Etobicoke New Condos

Mississauga New Condos

Scarborough New Condos

Markham New Condos

Vaughan New Condos

Oakville New Condos

Richmond Hill New Condos

Aurora New Condos

Thornhill New Condos

Brampton New Condos

Pickering New Condos

Ajax New Condos

Newmarket New Condos

Burlington New Condos

Oshawa New Condos

Scugog New Condos

Caledon New Condos

Whitby New Condos

Whitchurch-Stouffville New Condos

King New Condos

Milton New Condos

Clarington New Condos

OTHER REGIONS

Waterloo New Condos

Brant New Condos

Innisfil New Condos

Kitchener New Condos

Niagara Region New Condos

Grimsby New Condos

Hamilton New Condos

Barrie New Condos

Montreal New Condos

Kingston New Condos

Guelph New Condos

Cambridge New Condos

Halton Hills New Condos

Brantford New Condos

Prince Edward County New Condos

Shelburne New Condos

Springwater New Condos

Bradford New Condos

North Bay New Condos

London New Condos

Ottawa New Condos

Belleville New Condos

SEARCH CONDOS BY

Coming Soon VIP Condos

Platinum Access VIP Condos

Special Promotion Condos

SEARCH BY OCCUPANCY

Ready to Move in 2022

Ready to Move in 2023

Ready to Move in 2024

Ready to Move in 2025

Ready to Move in 2026

Ready to Move in 2027

Ready to Move in 2028

Ready to Move in 2029

SEARCH BY TYPE

Luxury Condos

Waterfront Condos

You are using an outdated browser. Please upgrade your browser to improve your experience.

Call or Text Us: 416.999.1240

[email protected]

What You Need to Know About Assignment Sales

• SHARE THIS:

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.

Assignment of Contract

Jump to section, what is an assignment of contract.

An assignment of contract is a legal term that describes the process that occurs when the original party (assignor) transfers their rights and obligations under their contract to a third party (assignee). When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement . Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer. However, the general rule is that contracts are freely assignable unless there is an explicit provision that says otherwise.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment ” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. If the assignment is valid, the assignor is not required to obtain the consent or signature of the other parties to the original contract for the valid assignment to take place.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts .

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

• Direct mailers
• Place newspaper ads
• Make posts in online forums
• Social media posts

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract , post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.

Meet some of our Lawyers

International-savvy technology lawyer with 35years+ in Silicon Valley, Tokyo, Research Triangle, Silicon Forest. Outside & inside general counsel, legal infrastructure development, product exports, and domestic & international contracts for clients across North America, Europe, and Asia. Work with Founders to establish startup and continuous revenue, sourcing and partnering with investors to attract funding, define success strategy and direct high-performing teams, advising stakeholders and Boards of Directors to steer company growth.

David Alexander advises clients on complex real estate transactions, including the acquisition, disposition, construction, financing and leasing of shopping centers, office buildings and industrial buildings throughout the U.S. An experienced real estate attorney, David reviews, drafts and negotiates all manner of retail, office and industrial real estate agreements, including purchase and sale agreements, construction contracts, leases and financing documentation.

Managing partner at Patel & Almeida and has over 22 years of experience assisting clients in the areas of intellectual property. business, employment, and nonprofit law.

Tiffanie W.

Tiffanie Wilson is a business transactions and personal injury lawyer. She helps clients realize their business goals by expertly drafting contracts, providing sound legal advice, and working for justice for injured clients.

An experienced attorney with a varied range of legal abilities. Focusing on real estate transactions and general commercial litigation.

Doug has over 20 years of private and public company general counsel experience focusing his legal practice on commercial transactions including both software and biotech. He is a tech savvy, business savvy lawyer who is responsive and will attain relationship building outcomes with your counterparty while effectively managing key risks and accelerating revenue. He received his Juris Doctor from Boston University School of Law earning the Book Award in Professional Ethics and after graduation he taught legal writing there for a number of years. Prior to law school, Doug earned a M.A in Mathematics at the State University of New York at Stony Brook, and a B.S in Honors Mathematics at Purdue University. After law school, Doug joined Fish & Richardson, where his practice focused on licensing software, trademarks and biotech. While at Fish & Richardson Doug authored a book on software licensing published by the American Intellectual Property Lawyers Association. Later he joined as General Counsel at FTP Software and led an IPO as well as corporate development. Doug has broad experience with a broad range of commercial agreement drafting and negotiation including SaaS software and professional services, distribution and other channel agreements, joint venture and M&A. Doug continued his leadership, corporate governance and commercial transaction practice at Mercury Computers (NASDAQ:MRCY) leading corporate development. Doug’s experience ranges from enterprise software to biotech and other vertical markets. He joined the board of Deque Systems in 2009 and joined in an operating role as President in 2020 successfully scaling the software business.

I graduated from Georgetown Law in 2009 and have been practicing for fourteen years. I primarily work on commercial contracts. I specialize in drafting, reviewing, and negotiating MSAs for services companies, specializing in SaaS agreements. I have drafted online terms of service, acceptance use policies, and privacy policies for clients across a range of industries. In addition, I counsel clients on NDAs, non-solicitation/non-competition agreements, employment contracts, and commercial and residential leases. Prior to opening my own practice, I worked for four years at one of the most prestigious law firms in the world, an appellate litigation firm, the federal government, and one of the country's most renowned government contracts firms. I live in Boulder but represent clients nationwide. Although I have represented numerous Fortune 500 companies and the Defense Department, my passion is advising startups and small businesses. Like so many of my clients, I am an entrepreneur and have owned and operated three businesses (my law firm and two companies outside the legal field). I understand the needs and concerns of small business owners. I look forward to working with you.

Find the best lawyer for your project

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

Need help with a Contract Agreement?

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

CONTRACT LAWYERS BY TOP CITIES

• Austin Contracts Lawyers
• Boston Contracts Lawyers
• Chicago Contracts Lawyers
• Dallas Contracts Lawyers
• Denver Contracts Lawyers
• Houston Contracts Lawyers
• Los Angeles Contracts Lawyers
• New York Contracts Lawyers
• Phoenix Contracts Lawyers
• San Diego Contracts Lawyers
• Tampa Contracts Lawyers

ASSIGNMENT OF CONTRACT LAWYERS BY CITY

• Austin Assignment Of Contract Lawyers
• Boston Assignment Of Contract Lawyers
• Chicago Assignment Of Contract Lawyers
• Dallas Assignment Of Contract Lawyers
• Denver Assignment Of Contract Lawyers
• Houston Assignment Of Contract Lawyers
• Los Angeles Assignment Of Contract Lawyers
• New York Assignment Of Contract Lawyers
• Phoenix Assignment Of Contract Lawyers
• San Diego Assignment Of Contract Lawyers
• Tampa Assignment Of Contract Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

How It Works

Want to speak to someone.

Get in touch below and we will schedule a time to connect!

Find lawyers and attorneys by city

Primary tabs

Assignment is a legal term whereby an individual, the “assignor,” transfers rights, property, or other benefits to another known as the “ assignee .”   This concept is used in both contract and property law.  The term can refer to either the act of transfer or the rights /property/benefits being transferred.

Contract Law   

Under contract law, assignment of a contract is both: (1) an assignment of rights; and (2) a delegation of duties , in the absence of evidence otherwise.  For example, if A contracts with B to teach B guitar for $50, A can assign this contract to C.  That is, this assignment is both: (1) an assignment of A’s rights under the contract to the $50; and (2) a delegation of A’s duty to teach guitar to C.  In this example, A is both the “assignor” and the “delegee” who d elegates the duties to another (C), C is known as the “ obligor ” who must perform the obligations to the assignee , and B is the “ assignee ” who is owed duties and is liable to the “ obligor ”.

(1) Assignment of Rights/Duties Under Contract Law

There are a few notable rules regarding assignments under contract law.  First, if an individual has not yet secured the contract to perform duties to another, he/she cannot assign his/her future right to an assignee .  That is, if A has not yet contracted with B to teach B guitar, A cannot assign his/her rights to C.  Second, rights cannot be assigned when they materially change the obligor ’s duty and rights.  Third, the obligor can sue the assignee directly if the assignee does not pay him/her.  Following the previous example, this means that C ( obligor ) can sue B ( assignee ) if C teaches guitar to B, but B does not pay C $50 in return.

            (2) Delegation of Duties

If the promised performance requires a rare genius or skill, then the delegee cannot delegate it to the obligor.  It can only be delegated if the promised performance is more commonplace.  Further, an obligee can sue if the assignee does not perform.  However, the delegee is secondarily liable unless there has been an express release of the delegee.  That is, if B does want C to teach guitar but C refuses to, then B can sue C.  If C still refuses to perform, then B can compel A to fulfill the duties under secondary liability.

Lastly, a related concept is novation , which is when a new obligor substitutes and releases an old obligor.  If novation occurs, then the original obligor’s duties are wiped out. However, novation requires an original obligee’s consent .  

Property Law

Under property law, assignment typically arises in landlord-tenant situations.  For example, A might be renting from landlord B but wants to another party (C) to take over the property.   In this scenario, A might be able to choose between assigning and subleasing the property to C.  If assigning , A would be giving C the entire balance of the term, with no reversion to anyone whereas if subleasing , A would be giving C for a limited period of the remaining term.  Significantly, under assignment C would have privity of estate with the landlord while under a sublease, C would not. 

[Last updated in May of 2020 by the Wex Definitions Team ]

• business law
• landlord & tenant
• property & real estate law
• trusts, inheritances & estates
• wex definitions

Trump target of assassination attempt; says he was shot in ear at rally

BUTLER, Pa. — Former President Donald Trump was injured in an assassination attempt Saturday when a gunman opened fire at his campaign rally, killing one spectator and bloodying Trump’s ear.

The shooter, who appeared to take an elevated position on a rooftop outside the venue, is dead. Another two spectators were critically injured. Trump’s campaign said he was safe.

The FBI identified the shooter as 20-year-old Thomas Matthew Crooks of Bethel Park, Pennsylvania. A motive was not immediately clear.

In a harrowing and chaotic scene, Trump was about six minutes into his remarks in western Pennsylvania when pops of gunfire rang out. The Republican presidential contender grabbed his right ear and then got to the floor, where he was immediately swarmed by Secret Service agents who piled on top of him to protect him.

The agents then helped Trump to his feet, surrounded him and rushed him offstage to a waiting vehicle. Trump — with blood on the side of his head and ear — repeatedly pumped his fist in the air and waved as the crowd cheered.

Trump said in a post on Truth Social about 2½ hours later that a bullet “pierced the upper part of my right ear.”

“I knew immediately that something was wrong in that I heard a whizzing sound, shots, and immediately felt the bullet ripping through the skin,” Trump wrote. “Much bleeding took place, so I realized then what was happening.”

Trump thanked law enforcement in his online statement and extended condolences to the families of the people killed and injured.

“It is incredible that such an act can take place in our Country,” he wrote.

The shots were fired from outside the Secret Service security perimeter for the rally, according to three senior U.S. law enforcement officials.

Reporters saw smoke and heard what they initially thought were fireworks before everyone ducked and law enforcement encircled Trump.

Screams rang out from the audience as the scene unfolded.

Pennsylvania Gov. Josh Shapiro said in a statement shortly after 11 p.m. that Trump “has now left the Butler area.”

Follow live updates on the Trump rally shooting

A doctor attending the event told NBC News that he saw a man suffer a gunshot wound to the head and helped carry him from the site of the rally. Speaking in a parking lot near the event, a mother and her son who were attending the rally told NBC News that they saw people in the crowd who were injured and carried away. And in the hours after the shooting, Rep. Ronny Jackson, R-Texas, said in an interview on Fox News that his nephew was grazed on his neck by a bullet at the rally.

People remained at the scene for 10 to 15 minutes after Trump was taken away, after which they were told it was an active crime scene and all attendees were escorted out.

Trump spokesperson Steven Cheung said Trump “thanks law enforcement and first responders for their quick action during this heinous act.”

“He is fine and is being checked out at a local medical facility,” Cheung said. “More details will follow.”

Trump senior advisers and leaders of the Republican National Committee released a statement later Saturday night saying that the former president “looks forward to joining you all in Milwaukee as we proceed with our convention to nominate him to serve as the 47th President of the United States.”

The Republican National Convention, where Trump is set to officially become the GOP presidential nominee, is set to begin on Monday.

FBI leads investigation

The FBI is leading the investigation into the shooting, according to a statement from the bureau. Agents are working alongside the Secret Service, as well as state and local law enforcement, and they are treating the rally site as an active crime scene, officials said at the press conference late Saturday night.

Law enforcement used DNA to help confirm the suspect’s identity, as he did not have identification on him during the shooting, FBI Special Agent Kevin Rojek said at the press conference in Butler, without identifying Crooks.

In the aftermath of the shooting, the FBI deployed investigative agents, bomb technicians and evidence response personnel.

Rojek asked that witnesses to the shooting contact the FBI.

There is no sign that the attack has any link to a foreign actor, a U.S. official said earlier on Saturday.

House Speaker Mike Johnson, R-La., said in a statement on X that he has been briefed by law enforcement. He condemned the attack as a “horrific act of political violence at a peaceful campaign rally,” saying it “has no place in this country and should be unanimously and forcefully condemned.”

Johnson said in a later post that the House would conduct a “full investigation of the tragic events today.”

House Oversight Committee Chair James Comer, R-Ky., said in a statement on X that he was “calling on Secret Service Director Kimberly Cheatle to appear for a hearing.”

In a letter to Cheatle, Comer requested that she voluntarily appear at a committee hearing on July 22.

Biden, political world react

President Joe Biden spoke with Trump later on Saturday, according to a White House official. He also spoke with Shapiro and Butler Mayor Bob Dandoy. 

In remarks delivered from Delaware, Biden called the attack “sick” and thanked law enforcement in remarks delivered on camera.

“There’s no place in America for this kind of violence. It’s sick. It’s sick,” Biden said. “It’s one of the reasons why we have to unite this country. We cannot allow for this to be happening.”

“Everybody must condemn it,” Biden added.

Asked by a reporter whether he believed that the attack on Trump was an assassination attempt, Biden responded that he didn’t “know enough” to say at the time.

“I have an opinion, but I don’t have any facts,” he said, adding that he wanted to gather all of the facts first.

Biden also said in a statement that he is praying for Trump. He said he has been briefed on the shooting.

“I’m grateful to hear that he’s safe and doing well. I’m praying for him and his family and for all those who were at the rally, as we await further information,” Biden’s statement said. “Jill and I are grateful to the Secret Service for getting him to safety. There’s no place for this kind of violence in America. We must unite as one nation to condemn it.”

Biden learned about the attack when he was coming out of church services, according to a person familiar with the timeline of events. He wanted to address the nation as soon as he was fully briefed, the source added.

Vice President Kamala Harris has also been briefed, she said in a statement.

She said she her husband, Doug Emhoff, “are relieved that he is not seriously injured. We are praying for him, his family, and all those who have been injured and impacted by this senseless shooting.”

She added that “violence such as this has no place in our nation,” urging everyone to “condemn this abhorrent act.”

In the minutes after the incident unfolded, politicians began posting on social media that they were praying for Trump, including three vice presidential contenders, Sen. JD Vance , R-Ohio, Sen. Marco Rubio , R-Fla., and North Dakota Gov. Doug Burgum .

Donald Trump Jr., one of the former president’s children, wrote on X that his father will “never stop fighting to Save America.” His message was accompanied by a photo of his father pumping his fist with blood on his face.

Democratic leaders also released statements expressing horror.

“I am horrified by what happened at the Trump rally in Pennsylvania and relieved that former President Trump is safe,” Senate Majority Leader Chuck Schumer, D-N.Y., said o n X . “Political violence has no place in our country.”

Shapiro, Pennsylvania’s Democratic governor, condemned the attack on X, as well.

“Violence targeted at any political party or political leader is absolutely unacceptable,” Shapiro said . “It has no place in Pennsylvania or the United States.”

Shapiro added that he has been briefed on the situation and that state police were on the scene, working with federal and local partners.

Independent presidential candidate Robert F. Kennedy Jr. urged Americans to pray for Trump.

“Now is the time for every American who loves our country to step back from the division, renounce all violence, and unite in prayer for President Trump and his family,” Kennedy said .

Former Rep. Gabby Giffords, D-Ariz., who was shot in 2011, released a statement condemning political violence.

“Political violence is terrifying. I know,” she said. “I’m holding former president Trump, and all those affected by today’s indefensible act of violence in my heart. Political violence is un-American and is never acceptable — never.”

House Majority Leader Steve Scalise, R-La., who was shot and injured in 2017 when a gunman opened fire on Republicans during a baseball practice, condemned “incendiary rhetoric” ahead of the attack about a second Trump term being a threat to the country.

“That incendiary rhetoric needs to stop, because all it takes is one person who’s just unhinged to hear that and go act on it, and think that that’s their signal to go take somebody out,” Scalise said during a Fox News interview.

Trump’s campaign is in a “complete communications lockdown,” according to a message sent to staff members by James Blair, the political director for the Trump campaign and the Republican National Committee.

“Everything is OK,” Blair wrote. “We have no details to share at this time but will follow up soon with more information.”

A Biden campaign official told NBC News that the campaign is also “pausing all outbound communications and working to pull down our television ads as quickly as possible.”

This is a breaking news story and will continue to be updated.

Dasha Burns and Jake Traylor are reporting from Butler, Pa.; Megan Lebowitz from Washington, D.C.; and Chloe Atkins, Tom Winter and Jonathan Dienst from New York City.

Dasha Burns is a correspondent for NBC News.

Jake Traylor is a 2024 NBC News campaign embed.

Megan Lebowitz is a politics reporter for NBC News.

Chloe Atkins reports for the NBC News Investigative Unit, based in New York. She frequently covers crime and courts, as well as the intersection of reproductive health, politics and policy.

Tom Winter is a New York-based correspondent covering crime, courts, terrorism and financial fraud on the East Coast for the NBC News Investigative Unit.

Jonathan Dienst is chief justice contributor for NBC News and chief investigative reporter for WNBC-TV in New York.