condo assignment ontario

Understanding Condo Assignments in Ontario: A Guide for Condo Assignment Lawyers

• March 25, 2023

As a condo assignment lawyer in Ontario, it’s important to understand the laws and regulations surrounding condo assignments. A condo assignment is the process of selling a pre-construction condo unit before the closing date to another buyer. In Ontario, there are specific laws and regulations that govern this process, and it’s important for lawyers to be well-versed in them in order to provide the best possible legal counsel to their clients.

The first thing to understand is that condo assignments are legal in Ontario, but they must be done in accordance with the Condominium Act and any other relevant laws or regulations. This means that both the original purchaser and the new purchaser must adhere to the terms of the original purchase agreement, as well as any additional terms that may be added during the assignment process.

One of the most important aspects of a condo assignment is the assignment agreement. This is a legal document that outlines the terms of the assignment, including the purchase price, the closing date, and any other terms that may be relevant. It’s important for both parties to have legal representation during the assignment process in order to ensure that the assignment agreement is fair and legally binding.

Another important aspect of condo assignments in Ontario is the role of the developer. In many cases, the developer may have certain restrictions or requirements when it comes to assignments, such as a maximum number of assignments allowed or a fee for completing an assignment. It’s important for lawyers to be familiar with the developer’s policies and to advise their clients accordingly.

When it comes to taxes and fees, there are also certain rules that apply to condo assignments in Ontario. For example, there may be land transfer taxes, development charges, or other fees that must be paid by the original purchaser, the new purchaser, or both. Lawyers should be familiar with these fees and should advise their clients accordingly in order to avoid any surprises or unexpected costs.

Overall, condo assignments can be a complex process, and it’s important for condo assignment lawyers in Ontario to be knowledgeable about the laws and regulations that govern them. At Falcon Law PC, our experienced lawyers are well-versed in condo assignments and are available to assist clients with all aspects of the assignment process. If you’re looking for legal representation for a condo assignment in Ontario, please don’t hesitate to contact us at 1-877-892-7778 or [email protected] . We’re here to help!

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Ontario Assignment Sale - Check out Pre construction Condos, Townhomes & Detached home assignment for sale in Ontario, Canada.

Is an assignment legal in ontario.

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.

What is a preconstruction assignment sale?

Unless otherwise prohibited or restricted in writing in the original agreement of purchase and sale, It is mostly legally permitted. In some cases, the developer may charge the assignor a fee for this kind of sale. The best thing to do is to contact the builder directly to confirm if you are allowed to assign your purchase contract because assignment restriction and fees vary from builder to builder.

Homebaba is one of the leading online marketplace for pre-construction and assignment sales in Ontario. Check out hundreds of Ontario Assignment Sales advertised by Liscenced Real Estate Agents in Ontario. Toronto Assignment Sale - Homebaba . The listings such as assignment listings, resale listings or preconstruction project listings & description of the related pages are uploaded by Real estate agents. Homebaba does not verify the correctness of the data uploaded on its platform. Please contact the listing agent to verify the information. E&OE expected.

Buying Condos on Assignment — A Quick Guide

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

What Is a Condo on Assignment Sale?

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

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

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

Why Purchase a Condo on Assignment?

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

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

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

Important Factors to Remember

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

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

Down Payment

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

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

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

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

Real Estate Broker

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

Closing an Assignment Sale

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

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

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

How do you buy an assignment for a condo?

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

How does a condo assignment work?

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

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

More pages:  

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

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Ontario’s Largest Pre-Construction Condo Assignments Network Assignment Pros has deep experience and a proven system in helping clients assign their pre-construction units for the best price.

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How Assignment Pros Can Help You Sell Your Condo Assignment

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With our proven and reputable marketing approach, we solicit the maximum amount of exposure to your unit which means an expedited and seamless assignment transaction.

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Assignments can be complex and filled with legal jargon. We have an extensive understanding of an assignment transaction from beginning to end and relationships with a variety of builder’s across the GTA to facilitate your assignment.

A Fully Turn-Key Experience

Finding a buyer for your assignment is not enough – we strive to obtain the best terms and the highest amount of money paid to you upfront. Our team consists of lawyers that specialize specifically in assignments as well as Accountants that can explain any tax implications. We provide a fully turn-key experience to ensure a smooth transaction.

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What is a “Condo Assignment Sale?”

A condo assignment sale refers to a real estate transaction where the assignor (original buyer) is “assigning” their purchase agreement to the assignee (new buyer), who will be responsible for taking over the agreement and completing the purchase of the unit once construction is done.  In most cases, a condo assignment sale benefits both the assignor and the assignee. The assignor will be able to avoid mortgage payments and potentially gain profit from the transaction.

Our Assignment Selling Process

Review of APS

We will thoroughly review the original Agreement of Purchase Sale (APS) of your property to note down specific details of your contract. read more

A deep market analysis will be conducted to determine the fair market value of your unit.

Promotion & Marketing

Once you’re satisfied with the price, we will begin promotion in our exclusive channels using our proprietary marketing. read more

Presentation of Offers

Throughout the process, we will provide you with regular updates and work towards an offer satisfactory to your needs.

Hear What Our Clients Say About Us

Their team was outstanding!! We are very lucky to have had the opportunity to work with Taz & Labeed . They are not only genuine, but take much pride in all aspects of their work and makes sure things run smoothly. From day they have been very helpful and always looked out for our best interest in finding us our Assignment property. Thank you so much, you guys are truly gems!!!

I had Purchased a precon a few years ago and unfortunately could not close on the unit. I had never done an assignment sale before so was a little bit nervous as I had heard they can be complex. The guys at Assignment Pros were awesome and easy to talk to when I reached out to them. They went over the entire process from start to finish and provided honest and transparent advise. Long story short we were able to sell my unit and I couldn’t be happier and more importantly a stress off my shoulders

Labeed is very knowledgeable and professional and knows what he is doing, he guided me through each step and made sure that all my questions were answered. Thanks to him I was able to buy a brand new condo downtown on Assignment under market value!

These guys have been by far the best to work with in the industry! I’ve been in the market for some time and worked with many agents but my experience with them has been outstanding. They went above and beyond exceeding my expectations on my first Assignment Sale. Their extensive knowledge and experience in the market as Top real estate agents made the whole process very smooth. I am very satisfied and comfortable working with Taz and the team. I highly recommend them to everyone looking to sell or buy an assignment.

We are Toronto’s Largest Assignment Property Wholesalers

Assignment Pros are one of Toronto’s largest assignment property wholesalers  We provide reliable, honest and expert guidance no matter your price range.

The Main Benefits of Selling Assignment Properties

• Sell your assignment for today’s market value without having to worry about closing costs.
• Assignors can also avoid occupancy fees when selling the property before the closing date.
• No need to worry about financing options, as the assignor will be the one to take over the acquisition.
• The assignor can also avoid carrying costs like mortgage, maintenance fees, and property taxes.
• Most assignors can also get their deposit back and explore other investment opportunities.

A Fully Turn Key Assignment Process With Our Expert Team

Accurately Determine Your Assignment Property’s Market Value

Before speaking with an interested buyer, it’s vital to ensure that your assignment property is accurately valued according to its property market value to maximize profit. The condo assignment experts from Assignment Pros will help you avoid undervaluing your property by providing an accurate property valuation.

Thoroughly Understand the Purchase Agreement Terms

To avoid encountering any penalties or breach of contract, it’s vital to thoroughly understand the terms of your purchase agreement to ensure a smooth-sailing transaction.  We will provide hands-on guidance and actively respond to any of your questions concerning your assignment property sale.

Prepare All the Necessary Information About the Property

Although there is significantly less competition in the condo assignment market, successfully attaining a buyer entails providing accurate and complete details about the assignment property The information should include the building or development details, unit specifications, and amenities.

Have an Experienced Lawyer Review your Contract

It can be challenging to interpret and understand the sales contract, but it’s vital to understand all the legal implications before making a sale.  This is why it is better to have an experienced real estate lawyer review your contract for you. A lawyer will ensure that all the terms and conditions in the contract are fair and legally binding.

Hire an Experienced Assignment Agent

Although it is possible to sell your condo assignment by yourself, an agent that exclusively specializes in assignments can make the entire process seamless.  Assignment Pros can guide you throughout the process for a smooth transaction and a successful assignment sale.

Any Questions!

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Contact us now and talk to our team today today to discuss your assignment related queries.

*E.&O.E. Terms and Conditions Apply – All information herein was gathered from sources both professional and lay deemed to be reliable. Assignment Pros and its representatives make no representation as to its accuracy and will not be held responsible for any discrepancies. Prospective purchasers are advised to verify all information herein. All renderings, pricing, incentives and other information are subject to change without notice.

Not intended to solicit buyers or sellers currently under contract with another brokerage.

Before an assignment sale in Ontario is approved and legalized, developers must provide assignors with a full disclosure statement outlining all the necessary terms and conditions of the sale.

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Condo Assignments Explained

By Condo Culture

__What is an assignment sale? __

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

__Why Do Assignment Sales Happen? __

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

How much do Assignment Sales Cost?

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

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

__Who pays what and when? __

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

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

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

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

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

__What is an assignment clause? __

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

Advertising an assignment?

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

Benefits of Assignments for Assignees?

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

__Benefits of Assignments for Assignors? __

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

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

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

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

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Guide to Condo Assignment Sales

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

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

What is an Assignment Sale

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

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

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

When does an Assignment Sale transaction happen

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

Who benefits from Assignment Sales

Assignments can be a useful tool for buyers and sellers.

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

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

Risks associated with an Assignment sale

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

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

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

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

Delays in occupancy or closing dates

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

Assignee is unable to close

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

Costs associating with assigning a unit

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

Payment of the interim occupancy fees

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

When does the Assignor get their money

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

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

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

Tax implications of Assignments sales

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

Steps involved in an Assignment Sales process

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

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

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

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

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

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

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6 Tips to Consider When Buying New Condos on Assignment Sales

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

What is an Assignment Sale?

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

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

Tips to Make Buying a New Condo on Assignment Sales Easier

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

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All About Condo Assignments

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

Some background on pre-construction condos…

To be able to really understand what an assignment is, you need to know a few things:

• When a Buyer agrees to buy a condo from a builder during the pre-construction phase, they sign a pre-construction purchase contract (with a price, terms and conditions, a deposit, etc.)
• When the new condo is built and ready to be moved into, there is a period of ‘interim occupancy’, where the Buyer can take possession (in other words, move into the unit). During the period of interim occupancy, the Buyer does not yet own the condo ; they simply pay the builder an amount roughly equal to what their mortgage payment + condo fees + taxes will equal. No transfer of land has yet occurred, and no mortgage has yet been given.
• Once a building has passed all the city inspections and gone through all the processes to become a legal entity, condominiums are officially registered . During this registration period, condo ownership is transferred to the Buyers, mortgages come into effect and Buyers officially become owners (a.k.a. the closing ). The period between occupancy and registration (i.e. the interim occupancy period) can be anywhere from 3 months to 2 years–though registration typically happens 4-8 months after people begin to move in for the interim occupancy period.
• Sometimes, Buyers of pre-construction condos change their minds and want to sell their condo either before the occupancy period or before the official close. Their life circumstances may have changed, or they may have been speculative investors who never intended on actually taking possession of the unit. Because they don’t yet own the condo, they can’t actually sell it. What they can do however, is sell their contract (their agreement with the builder to buy a unit) to another Buyer. This is what we call an assignment .

What is a condo assignment?

With an assignment, the Seller is actually selling their interest in a property (in other words, their contract with the builder). They aren’t selling the actual condo (as they don’t own it yet); they are selling their promise to purchase a property .

When you purchase an assignment, you are essentially stepping into the shoes of the original purchaser. You can’t renegotiate the price or terms of the contract, you are simply taking over the contract as it already exists.

It’s important to note that some builders won’t allow their original purchasers to assign contracts , or will only do so for a fee (we’ve seen assignment fees from $750 to $7,000). Builder approval to assign a contract is almost always necessary.

Advantages and Risks of Assignments for Buyers

• When you buy an assignment, you take on all the terms and conditions that the original purchaser agreed to – so if he or she didn’t get a lawyer to approve the agreement for example, those risks are passed onto you. While you can have your lawyer review the terms they agreed to, you can’t renegotiate them.
• You also take on the usual risks of buying a pre-construction condo: time delays, changes to the unit or building, extended interim occupancy periods, etc.
• Depending on what stage of construction the condo is in when the contract is assigned to you, you may or may not be able to be involved in selecting finishes and upgrades .
• Because it’s a new construction condo, HST may apply. If you don’t actually move into the unit, you’ll be responsible for paying tens of thousands of HST on closing.
• When a condo is assigned to you, you generally have to mirror the deposit that the original purchaser has paid to date . So rather than providing the usual 5% deposit for a resale condo, you may be required to provide 15% of even 20% as a deposit. If you are a first-time buyer with a lower down payment, you may not be able to afford the deposits required for an assignment.
• With an assignment, you will be eligible for the Tarion warranty program , which provides years of warranties against defects and problems with your condo, and because all the appliances will be new too, they’ll also be covered by warranties.
• When the unit is officially registered and you close on the purchase, you’ll be responsible for all sorts of closing costs that don’t apply to resale units. These ‘ builder adjustments’ apply to all new construction projects and include development and education costs, HST on appliances, utility connections fees and Tarion fees. These builder closing costs can easily amount to 1-3% of the original purchase price (and there’s talk of the development fees doubling in Toronto in the near future). If you’re looking at taking over someone else’s contract via an assignment, look to see if the original purchaser capped the amount of these costs when they originally negotiated the unit. Otherwise, make sure you have lots of money put aside for closing costs.
• Legal fees to purchase an assignment condo are generally higher than typical resale condo purchases. For a condo under $500K, plan on legal fees around $2,500 (vs $1,800 for a resale).
• When you close on the actual purchase with the builder, you’ll need to pay land transfer tax . Because no land ever exchanged hands, the original purchaser will get to avoid paying land transfer tax.
• Going through the assignment process can be a great way to purchase a condo in a building that has no remaining inventory , and often the actual purchase price (before closing costs) is lower than it will be once the building has registered and the condos are offered for sale in the resale market.

The assignment process is a tricky one, with risks, legal requirements and paperwork that doesn’t look anything like the usual agreement of purchase and sale for a condo.   If you’re considering an assignment, make sure you work with a REALTOR who understands the intricacies of assignments and can guide you through the process. As always, we’d be happy to help!

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Do you have 2 bedroom unit in 50 Wellesley?

Melanie Piche says:

No sorry, we don’t have anything at 50 Wellesley right now.

Clinton says:

Can you explain how the above might affect an “assigned sale” property being rented out?

In other words- if I purchased a unit – and it’s currently under assigned sale and I wish to rent it out in an unfinished building at the moment is there anything the prospective tenant should know ahead of time?

The original agreement of purchase and sale with the builder will define what’s allowed during the occupancy period – some builders restrict rentals completely, some want to approve them, some allow rentals if the buyer uses the builder’s agent and some let people do whatever they want.

Vanessa says:

Do you have any advice on selling a condo assignment? How successful are they?

Condo assignments aren’t easy or in huge demand, but if you bought in a sold-out building that people are still interested in, it’s totally possible. That assumes you have the right to assign the unit in your contract of course…

If the Agreement of purchase and sale stated that prior to closing, the purchaser covenants and agrees not to sell, lease, transfer or assign this Agreement or unit, could I still be able to assign the unit if I pay a fee with the vendor written consent?

It sounds like you’ve agreed not to do it in your contract…you’d have to talk to the builder to see if they are are open changing the terms of your contract.

Sha Song says:

If i am buying an Assignment with a tenant in the unit in May and i plan to use it as my primary residence after final closing in September 2016. Does the few months of rent I receive from the tenant affect my qualification for the HST rebate?

You’ll want to check that with your lawyer…HST rebate laws are complicated and beyond the scope of what we can give advice about. Good luck!

mohsen says:

if i buy an assignment condo with a purchase price higher that what original buyer paid, how is the land transfer tax calculated? Builder only charges tax based on original purchase price. How should I declare the purchase price, so when i sell the condo few years down the road and if I have to pay capital gain, I won’t have to pay capital gain based on the price I actually paid?

Excellent questions! You’ll want to talk to your lawyer/accountant about that…that’s outside of the scope of the advice we can give.

Brendan Powell says:

You might find this Ministry of Finance bulletin useful:

http://www.fin.gov.on.ca/en/guides/ltt/guidenote1.html

Generally though, when it comes to land transfer tax you are paying tax on the value of what you bought, i.e. What YOU paid. For capital gain, I expect you only pay tax on whatever gain YOU had. Gain that happened on someone else’s watch is their problem!

As Melanie says though, you need an accountant and lawyer to advise on your particular situation.

sorry in my last comment, I meant ” I won’t have to pay capital gain based on the price original buyer paid”

if I buy an assignment property, do I pay the despoits to original buyer right away or do I wait until closing also do I have to get mortage pre approval right away or can I wait until later.

Pooja says:

How likely is it that a seller is able to get a higher price on an assignment than they paid? If they do, then is the buyer required to pay the entire amount at once?

Many people successfully assign properties at a premium. On the closing of the assignment, the buyer pays you whatever deposit you paid the builder + any profit you’ve agreed on. They pay the rest of the money (usually via mortgage) to the builder when the building registers.

Sandra says:

Hello, I am looking to assign my newly-built three-bedroom townhouse in Mississauga (close to Erin Mills Town Centre mall) as I am moving out of the country. My agent said that we are not allowed to advertised on MLS so how are we supposed to find potential buyers then? Word-of-mouth really restricts the buyers pool. Well, if anyone is interested please let me know by responding to this comment. Thanks.

Where and how you are allowed to advertise an assignment is set by the builder and would have formed part of the Agreement of Purchase and Sale that you signed. While it’s sometimes possible to negotiate these things while you’re making the purchase, if you signed something that restricted marketing, unfortunately you’re options are few. Hopefully you’re working with an agent who does a lot of assignments and has a ready list of buyers!

Jamey says:

Actually, I am not sure if you would answer to my question but… I at least wanted to try as I am very desperate to hear 3rd expert’s invaluable opinion. I am in the process of buying an assignment and currently waiting for a builder to approve my contract with an original purchaser. My issue here is… this approval has been pending for about 6 months now and I was wondering if it is a common case. Regardless it’s common or not, what reason do you think there is, why the builder put a hold on to approve this agreement this long? The original written contract between the original seller and the builder clearly indicates that their contract can be assigned one time before the condo registration so this whole thing was totally allowed.

It would be deeply appreciated if you could provide some thoughts on this. Thank you very much.

I’m not able to answer your question because it’s a current transaction, and of course, I don’t know the whole story. I would suggest you talk to the agent who is representing you – they should be able to shed some light on what’s going on!

Dawn Renwick says:

Hi, I am an international investor who recently purchased a condo which will complete in 2020. I am instructed that if I want to sell once we approach completion this is called an assignment. In my contract there are no restrictions as long as 90% of the units have been sold. My question is as an international investor is there any other tax implications that I should be aware of??

You should talk to your realtor and an accountant to understand the current tax situation (which of course may very well change by 2020).

Could assignement fees be negotiated with the builder?

Yes, during the initial negotiation of the purchase contract.

yusuf matadar says:

MLS allow to advertise underconstruction condo for sale if builder gives consent to do so ?

Could you “sell” your assignment to your kids? Of course without a profit on my end, at the price of the purchase I have made years ago when it was still cheap? What costs other than the legal and developer fees do I need to consider?

You can sell your assignment to your kids at whatever price you want..though check with an accountant to see if there are any tax implications for either of you. Legal fees are usually the only thing you’ll need to account for, other than builder assignment fees. Developer fees and land transfer taxes would be paid by your kids..

What percentage would you typically purchase an assignment compared to an actual closed unit?

The price totally depends on what’s happening with demand/supply in the building…closed units usually come at a premium (given additional costs incurred by the buyer) but it is building-dependent.

Thanks for the helpful article (and comments!). I bought a unit off-plan in Feb 2015 and the property has definitely increased in value since that time. The latest interim occupancy date is for June 2018 but I’m considering selling my unit on assignment – do you have any guidelines for setting the price?

I’d suggest you work with an agent who is experienced with assignments! They’ll be able to help you set the price and find a buyer. Happy to connect you with our assignment specialist – just email [email protected]

Hi When I buy an assignment, wondering if I can get a mortgage on an assignment price? Or the original price will be the price that I can get mortgage on

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Pre-construction Condo Assignment Sale

Pre-construction assignment sale condo is when the original buyer of a condo re-assigns the contract for purchase to another buyer. Let’s see how does selling the assignment condos in GTA work

What is an Assignment sale?

Simply put – An assignment sale is when a buyer of a property sells their promise to purchase said property to an “Assignee”, essentially selling the contract they have with the builder to the new purchaser, allowing them to complete the final sale.

Although it’s possible to assign any type of property, provided there is no restriction to this in the contract, it’s most commonly used in the sale of pre-construction condos in Toronto .

An assignment is when the original buyer of a property (the “assignor”) sells their interest in a property before they physically take possession, in most cases this is because the property has not been built yet. This allows a new buyer (the “assignee”) to take over the original buyer’s rights to purchase the property, giving the assignee the ability to complete the final sale with the Builder.

Assignment Condos

When you’re on the market for a pre-construction condominium unit, you will almost always be given an assignment clause in the form of a contract. What sounds like a great idea at the time can prove troublesome years later, when plans change, you can choose to sell your assignment before the condominium is even built. At 29Condos we always strive to keep you well informed and up to date on the latest industry details from the pre-construction market, allowing you to make an informed choice every time.

Is It Worth It to Buying an Assignment?

Some of the best deals on the market in the GTA today are assignments. This is because the patience it takes to buy a property before its construction isn’t for everyone. In addition to these types of sales having less competition and fewer buyers, many real estate agents aren’t familiar with the ins and outs of assignment sales and often won’t be knowledgeable enough to advertise these listings. Buying a contract through assignment gives you the opportunity to avoid excessive price inflation due to bidding wars, allowing you to reap the rewards and pay much less than you would for a resale unit.

Assignment condos are mutually beneficial for both the buyer and the seller. The seller is able to list their unit before it’s even completed and the buyer receives a great deal, by saving them lots of time searching for the perfect place 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. Not to mention you’ll likely move into the unit sooner than the usual 3 to 4 year waiting period for the building to be completed!

How does Assignment sale work

Condo Assignment Toronto

Do you pay hst on an assignment sale in ontario.

In short, if the sale and deposit is taxable GST/HST will still apply, but when you become the legal occupier of the condo unit, you may be eligible for a significant HST rebate for the price you paid to buy the unit. When trying to pursue this option, we highly recommend legal counsel to properly advise you in the right direction. We can help you get in contact with those able to help you through the rebate process without any unwanted surprises

We Can Hunt Assignments For You

Assignment selling restrictions.

There are many assignment restrictions outlined in certain buying contracts that make the selling of assignments quite difficult. Most pre-construction Agreements of Purchase & Sale from Toronto Builders do not allow the marketing of an unfinished condo before it’s completion, 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 with the threat of a breach of contract in the event a buyer does this. If no one knows about the property, it doesn’t matter how great a place it is, it just won’t sell.

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

The best option is to go with a realtor who specializes in assignment sales and has a database of potential buyers looking for assignments. Getting the right condo assignment truly depends on the right connections in real estate, a good relationship with the developers, and trust between the investor and realtor. We receive new assignments daily and in most cases, they are sold in a few hours. The market for assignment sales is very fast-moving and there is always a buyer. It’s important to go with someone you can trust to constantly monitor the market. We will always keep you in the loop at all times. Contact 

Condo assignments – what you need to know about HST

Many people think that doing an assignment of a home purchase agreement is a simple transaction, but the reality is far different. It is an extremely complex transaction and, if not handled properly, can result in the loss of a lot of money. There are two issues relating to harmonized sales tax (HST) in Ontario that assignors (sellers) and assignees (buyers) should consider when entering pre-construction freehold and condominium assignments.

HST on assignment fees

In Ontario, HST is payable on an assignment sale of an Agreement of Purchase and Sale (APS). Remember, when you do an assignment, you are not selling the house or property – you are selling only your APS. The issue is what you pay the HST on, who pays it and how much that will be. Generally, the HST will be in addition to the price, and paid for by the buyer.

Your assignment agreement must be clear to show what the profit is on the transaction, as it should only be the profit that is subject to HST.

The standard realtor’s form of an assignment agreement does not include sections on crucial issues regarding HST. It is important you get a lawyer to help carefully draft the assignment agreement to reduce the risk of future issues with CRA. In a resale home situation, HST is payable on the profit only provided the assignment agreement is properly drafted.

As an interesting aside, most people would reasonably conclude that getting back your deposit is not subject to HST, but CRA takes the position that it is – even though CRA lost in a court ruling that said there is no HST on deposit returns.

HST new housing rebate

Adjustments on closing can surprise homebuyers new to pre-construction properties, and assignments only add to the potential shock. The builder will want to collect the HST on closing of the original purchase where there has been an assignment sale, and the buyer will need to get the HST back later.

Newly built properties are subject to HST, but some or all of the HST payable can be recovered immediately on closing through the HST New Housing Rebate (the Rebate). The Rebate has specific rules that may affect a purchaser whose circumstances change over time; the Rebate is provided only if the purchaser or an immediate family member resides at the property, and if the builder accepts that this is correct and there has been no assignment outside that group.

In pre-construction condominium assignments with occupancy closings, an assignee must confirm whether the unit has ever been occupied. If a unit has been occupied, then the assignee may not be eligible for the Rebate.

The moral of the story is that you really should retain an experienced lawyer to help you through these issues, whether buying or selling. Realtors provide an important service, but a lawyer will take the time to review everything properly and make sure you are protected, and that there are no open questions.

About Jayson Schwarz

Jayson Schwarz LL.M is a Toronto real estate lawyer and partner in the law firm Schwarz Law Partners LLP. Visit the website at schwarzlaw.ca or email your questions about real estate to [email protected]

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Latest Condos Assignment Ontario: Everything You Need to Know About Assignment Sales

July 10, 2022.

Looking to buy a condominium in Ontario but aren’t finding one? Consider the latest condos assignment in Ontario . There are many owners of pre-construction properties who want to sell units before taking possession. This guide will help you learn all about assignment sales in Barrie, Mississauga, and various parts of Ontario.

Canada’s real estate industry has been attracting renowned companies and builders from around the world for the last many years. From townhomes to pre-construction condos and detached homes, investors have lots of real estate opportunities in Barrie, Mississauga, and many parts of the Greater Toronto Area (GTA).

However, finding and buying condominiums isn’t as easy as it seems, especially if you are in search of pre-construction units. But, it also doesn’t mean you should cancel your plans to buy a condo in a region like Ontario. There are opportunities like assignment for sales in Mississauga, Barrie, and various other cities. What are they, and how can you invest in them?

What are Condo Assignments?

An assignment takes place when the original buyer of a condominium sells their unit before taking its possession. In other words, the buyer sells the contract to a new buyer. In the process, the original buyer is known as the ‘assignor’, and the new buyer is called the ‘assignee’.

The assignee is the one who completes the deal.

When the original buyer - the assignor - lists the property among the latest condos assignment in Ontario, the individual doesn’t sell the property but sells their rights and promises to buy it. The new buyer - the assignee - takes the role of the original buyer and completes the assignment.

Why Consider Assignment Sales?

First things first, a real estate company behind the project isn’t benefitted from assignment sales.

However, assignors and assignees can reap several benefits. For example, an assignor may have several reasons to list the property as an assignment sale - including not being able to pay the amount for the unit, aiming to earn from a pre-construction condos unit, and finding more lucrative opportunities.

On the other hand, assignees have advantages like access to condo projects that are already sold out and quick deals. Apart from that, there may be chances that some assignees put their unit under assignment sales in Barrie due to sudden change in their lives. In such a situation, they want to get rid of the deal as soon as possible. Here, an assignee can get a profitable offer.

What to Consider in Case of Assignment Sales

Assignment sales may be tempting, but there are many things to take care of to ensure that everything is fine with the deal.

Closing Date

When considering assignment sales, take a close look at the closing date, expected occupancy date, and assignment closing date.

Down Payment

When you are thinking of an assignment sale, ensure that you are allowed to pay the down payment. In case you are asked to pay a down payment less than 20%, the assignment sale isn’t the right option for you.

Builder’s Consent

Although a builder or a real estate company behind the project isn’t benefitted from assignment sales, it is necessary to get their consent. When the closing date is close, a builder may refuse to give the consent as it may lead to confusion.

In the End - Find the Latest Condos Assignment in Ontario

To find an assignment sale that suits it, reach a reliable platform that provides you with information on all the latest condos assignment in Ontario. Consider your options and choose the one that meets your requirements.

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The Advantages of Buying a Condo on Assignment

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Buying a condo on assignment is increasing in popularity as more buyers become educated on the advantages of taking this route to condo ownership in Toronto. We’ve processed countless assignment sales and have many happy buyers and sellers among our clients. How can buying on assignment benefit you? Let’s take a look at why so many people are using this strategy.

What is a pre-construction condo assignment sale?

The purchaser of a pre-construction condo investment will sometimes choose to sell their contract with the builder before they officially take possession. Because they don’t yet own the condo itself, they are selling their Agreement of Purchase and Sale with the builder to a new buyer. This type of transaction is referred to as an assignment sale .

Assignment sales usually take place if the original purchaser’s financial situation has changed, if they’ve had a change of heart, or are simply looking to “flip” the property . Flipping pre-construction condos can be a strategy some investors use to avoid paying closing expenses and cash out before registration, making a profit on their original investment.

Educated buyers and realtors know that when purchasing a pre-construction condo, an assignment clause should always be requested. By having this in your Agreement of Purchase and Sale, you are able to then consider selling your unit on assignment. You will still need builder approval, but this will already be built into your contract.

Advantages of Buying a Condo on Assignment

You can purchase a new condo for less.

By buying a new condo on assignment you’re likely purchasing a product that’s been sold out for quite some time, at a price that’s likely no longer available. The price per square foot should ideally be less than today’s pre-construction prices. Not only are you able to get a brand-new condo but you’re able to get it for a price that no longer exists in today’s market.

Buying on Assignment Gives Buyers the Advantage

After construction it’s not abnormal for investors who want to cash out quickly, to sell before they take possession. What this does is create a massive amount of inventory in a building, which means buyers have more choice at a time when the building is still a work-in-progress. Additionally, investors are motivated to negotiate because they want out of their contract prior to the condo’s registration date, especially if there’s lots of inventory.

Built-In Equity

One of the reasons why buying a pre-construction condo is so appealing is the ability to build equity as the condo is being constructed. When someone is selling a condo before closing, they are typically leaving some of the equity that the condo has earned on the table for you to inherit.

Toronto’s condo market has remained strong and condos, even pre-construction condos, are generating significant equity each year.

Keep These Things in Mind When Buying on Assignment

Agreement of purchase & sale cannot change.

When buying a condo assignment, you are inheriting the contract from the original purchaser as it already exists. It’s important to have your lawyer review the contract but note that the terms the Assignor agreed to are no longer negotiable.

Payment Structure

A typical deposit structure for a pre-construction condo is 15% to 20% spread out over a couple of years – the varies from developer to developer. Depending on what phase the building is in when you purchase the assignment, you will pay the Assignor the deposits they have already paid to date. The remaining balance will be paid to the builder. Overall, this could be 15-20% up front.

In rare instances, you can purchase an assignment with as little as 5% down depending on what the Assignor’s terms are. By putting less money down, the Assignor has to wait until registration to receive their profits. Although this is not the norm, the likelihood increases as the registration date nears and the building is almost complete.

Closing Costs

When purchasing a condo assignment, you will be responsible for all the closing costs when the building is registered with the city. Closing costs include Land Transfer Tax, Development Charges, Utility Connection Fees, HST and any legal fees. It is also at registration that your mortgage will officially begin.

Keep in mind, you are completely exempt from HST on a pre-construction condo if you plan to use the property as your principal residence. Investors who are leasing their condo will need to pay HST upfront. Your lawyer can file for a full HST rebate, refunded approximately 4 to 6 weeks later, provided you have a one-year lease in place.

Use a Seasoned Real Estate Broker

Using a broker who is seasoned and well-versed in assignment sales will help your transaction go smoothly. The same with your lawyer and mortgage broker. The paperwork involved with an assignment is a bit more complicated than your standard real estate transaction. Many agents and even real estate lawyers are not familiar with this type of sale, so make sure you use an agent who’s familiar with how to complete an assignment sale.

Customizing Your Unit

Depending on the timing of the assignment, you may be able to select your own finishes. The builder contacts the buyer typically one year prior to completion for these custom details.

Buying on assignment can provide many benefits. You’ll be able to get into a brand-new building, possibly customize your suite and realize equity upon registration.  You’ll also benefit since your money is not tied up for years in a pre-construction condo purchase and get a short closing without having to wait.  They also get convenience and luxury of buying brand a new unit and often pay lower maintenance fees.  So don’t shy away from assignment sales – just make sure you’re working with a broker who has an exceptional track record of successful transactions.

If you’d like to see our top picks for available assignment sales, simply fill out the form below – we’ll be in touch right away.

Comment by CJ | on October 12, 2020 at 5:13 pm

Great article. Been looking to buy assignment sale, Price jumped up by $180,000 since original pre construction price in 2016 . Agents tell me, market went up. My argument is, I’m buying original buyers contract, condo hasn’t closed, therefore, I’m prepared to offer same price. I’m a wrong in this?

Comment by Arielle Nemo | on November 11, 2020 at 3:37 am

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Comment by Zoe Campos | on November 19, 2020 at 8:44 am

Thanks for reminding me to have a legal expert review the contract first before buying any properties. I am thinking of purchasing a condominium around Brooklyn, NY, and turn it into a rental property, but I’m not sure about my first step yet. Maybe it would be better to consult a property management expert who can help me with the process and look for tenants afterward.

Comment by Arielle Nemo | on January 6, 2021 at 8:38 am

Appreciate your sharing, great article post. Keep on updating these kind of informative things.

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Comment by Roslin Smith | on January 11, 2021 at 7:56 am

Excellent..!!!! post thanks for sharing such useful content.

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Comment by Ethan Lee | on February 4, 2021 at 6:34 am

It is really too good. I am very glad to go through this kind of helpful information. Thanks for sharing a nice blog.

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Comment by Roslin Smith | on February 15, 2021 at 10:33 am

Great article with excellent idea!Thank you for such a valuable article. I really appreciate for this great information.. 

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Condo Assignment

Condo Assignment-What to look out for?

Condo Assignment is becoming very common, especially in the Toronto condo market.

And now this trend is coming to Downtown Mississauga. At my request, Shaffiq Dar, a prominent real estate lawyer in Mississauga has provided some insight into buying and selling condo assignment Sales and Purchases. Below is his reply:

 There are several reasons for this trend in condo assignment sales?

• A simple supply and demand issue – there is more demand for condos then there is stock available;
• Many more people are interested in real estate investments and are willing to purchase pre-construction units which they then try to flip when demand is greater;
• Simple greed – purchasers camp outside new developments, snap up units at reduced prices and then enter into assignments once builder’s inventory is sold out.

Condo Assignment sales are messy and unless you are very careful, these deals can go sour fast. As assignments are now seen as “Third Way” of buying condos in Toronto (the traditional two ways being pre-sale or resale), it is important for you, as real estate agents, to understand:

• what is a condo assignment sale;
• what are the advantages for both the purchaser and the seller in condo assignment sale;
• what clauses you should ensure are included in the Assignment of Agreement of Purchase and Sale; and finally
• what the “red flags” are that should put you, as the purchaser’s agent, on guard.

What is a Condo Assignment Sale?

The most important thing to bear in mind when dealing with a condo assignment sale is that this is not the sale of real estate but merely a sale of the interest in the Agreement of Purchase and Sale. Your client is not buying the property. He is buying the Agreement of Purchase and Sale.

So the first thing that you must start off with is a review of that Agreement of Purchase and Sale. I will refer to that as the Underlying Agreement. And to keep it simple, we will refer to the parties involved in such a transaction as the builder, the seller and the purchaser.

So Sam enters into an Agreement of Purchase and Sale with condo builder. That is our Underlying Agreement. Sam then enters into Assignment of that Underlying Agreement with Sara. Sam is our seller and Sara is the purchaser.

Advantages for Seller

Some of the advantages from the seller’s perspective are:

• Get money back! The Seller will have paid a deposit of 20-25% to the Condo Builder. Let’s face it, 20-25% of the purchase price for an average condo in Toronto is a lot of money. Either the seller’s plans have now changed and he wants that money for something else or the seller is an investor and wants to get his deposit back so he can move on and invest that money in another project. Selling by assignment is a way to get that deposit money back.
• Avoid occupancy fees . If you have no intention of living in the unit, why pay occupancy fees? Remember that in some cases, there may be a gap for up to 2 years between occupancy and final closing. The seller does not want to pay occupancy fees for 2 years if he is neither living there nor has any intention of living there.
• Avoid closing costs. Closing costs on a new condo can be significantly more than the closing costs on a typical resale. This is because the Agreement of Purchase and Sale will usually have a list of closing costs which are to be adjusted on final closing. Such closing costs may include things such as the Tarion warranty charges, law society levy, meter connection charges etc. Selling by way of assignment means the seller passes all these closing costs on to the buyer.
• Increased value. If the seller had bought a pre-construction condo in 2007 or before, then your investment has probably appreciated significantly. For some, selling their contract is a great way to take the profit and move on.

Advantages for Purchaser

Although you, as agents, and I, as the lawyer, may not like condo assignment sales, we need to consider it from the point of view of our clients. Let’s take a look at the key advantages for buyers of assignment listings.

• Lower purchase price . Buying an assignment is sort of like having a time machine and being able to go back in time to purchase a condo today, at yesterday’s prices. Sellers know they have to price their units for less than what the developer would sell a similar unit at today. Savings can be in the tens of thousands compared to buying through the developer, and in some cases the price paid is even lower than what is available on the resale market. Remember that the seller is keen to re-coup his investment (i.e.. the deposit) and the profit and move on.
• Stronger bargaining position . Instead of dealing directly with the Condo Builder, the purchaser is negotiating and dealing with an individual. The purchaser may be able to negotiate a better deal than if he were dealing with the condo builder.
• New condo without the wait. Speaking to many purchasers, especially first time home buyers, the common theme was that they would not want to wait for a couple of years to move in to their new home. Many others are not comfortable with the pre-construction sales because they cannot “touch and feel” the product before they buy it. When your client buys an assignment, he does not have the usual 3-4 year wait time and often occupancy is only months away. The greater advantage is that the construction has commenced or is nearing completion and the purchaser is able to touch and feel the product, not just buy from a plan.
• Tarion Warranty. All new development is covered under the Ontario New Home Warranty Program or Tarion. The purchaser will have that advantage of the Tarion warranty if there are any defects in the property and for many that peace of mind is the deciding factor.
• Inherit VIP incentives . Many sellers of assignments are investors who purchased during the initial ‘VIP’ stage of the sales process, when prices were lowest and often many upgrades were thrown in by the developer for free. We are all familiar with the lines ups outside new developments and at times people even camp out there for days to take advantage of these incentives. Those free upgrades and lower prices can be passed on to the purchaser.
• Negotiate from a position of strength. Many sellers are selling because they cannot wait until occupancy or final closing -they need to get their money out now. Negotiating with someone in this position can be advantageous. The purchaser has the upper hand, so the speak – a rare phenomenon in the real estate market today.

Title Insurance. One thing to bear in mind is that title insurance is only available on ‘real’ property. Thus an assignment purchaser will not be able to obtain title insurance until the final closing.

What clauses should be included in the Condo Assignment Agreement?

As with anything else, your foundation has to be strong. In an assignment sale, your foundation is the Underlying Agreement. Rule number one for you must be that the foundation i.e the Underlying Agreement should be strong. Never ever let your client enter into an assignment agreement without a review of the Underlying Agreement having been completed. Make sure that the Assignment Agreement is conditional on the purchaser’s lawyer reviewing the Underlying Agreement.

Almost every Pre-construction Agreement of Purchase and Sale that I have reviewed to date has some restriction on the sale of the unit before final closing. Some restrictions are much more stringent than others. Most will only agree to an assignment after at least 75% of the units in the project have been sold. Many will demand an assignment fee which at times could be as high as $5,000.00.

It is imperative that the purchaser review the Underlying Agreement to confirm that an assignment is permitted and what fees, if any, are payable to the Condo Builder on an assignment.

If an assignment fee is payable, the purchaser should negotiate with the seller such that either the seller will pay the assignment fee or at least pay half the amount.

The seller may have paid up to $50,000.00 as a deposit to the Condo Builder. That may equal to $2,000.00 annually in interest that would be credited to the seller on final closing. The purchaser wants that interest to be credited to her on final closing and the seller wants the interest. A compromise may be for the assignment agreement to provide for the interest credit on final closing to be split between seller and purchaser.

As we noted above, the closing costs on the purchase of a new development are significantly higher because of the Tarion fees, meter connection charges, development levies, etc. The purchaser wants to ensure that these closing costs are known so that he is not caught by surprise at the time of final closing. Many times, the seller may have got the closing costs capped. You want to make sure that these caps are passed on to the purchaser. Sometimes, you may be able to get the seller to agree to pick up part of the closing costs. Of course, this will depend a lot on how eager or desperate the seller is to sell.

If the seller is keen to re-coup his investment, then he may try to insert a clause in the assignment agreement that the deposit paid by the purchaser is to be released to the seller immediately. Naturally, the purchaser does not want that because if the deal falls through, it becomes difficult to recover that deposit form the seller. You want the deposit to be held in trust by the seller’s lawyer or the real estate agent.

Confirm in the assignment agreement how the seller will meet all of the requirements for a valid assignment, and set out what will happen if there is any breach of the assignment agreement or the Underlying

The purchaser must review the Condo Builder’s Disclosure Statement and thoroughly review all documents related to the sale.

There should be an acknowledgement that the purchaser is responsible for any remaining deposits to be paid to the Condo Builder.

There should also be an acknowledgement that the purchaser is responsible for the occupancy fees.

There must be an acknowledgement that the seller understands that if the purchaser is unable to close, the seller will be responsible for closing the condominium;

Has the unit been rented during interim occupancy? Are there any tax implications for this? Does the purchaser need to get an assignment of the tenancy agreement or an acknowledgement of the tenancy terms by the tenant?

Red Flags in a Condo Assignment

• Some of the issues that should put you, as the Purchaser’s agent, on guard when dealing with assignment sales are:
• Seller does not want to provide copy of the Underlying Agreement until Assignment Agreement is firm.
• Seller does not agree to Assignment Agreement being conditional on review of Underlying Agreement and Condominium disclosure documents being reviewed by purchaser’s solicitor.
• Seller is overly greedy – purchase price in Assignment Agreement is close to market price of the property or the price that Condo Builder is offering if there are any units in the project still unsold.
• Purchase price in Assignment Agreement is lower than or very close to the purchase price in the Underlying Agreement i.e Seller is not making a profit? What is the reason for the sale?
• Expected closing date is long after closing of assignment sale.
• Seller cannot confirm that consent of the Condo Builder will be provided for the assignment.
• Seller is very keen to get out of the deal, at whatever cost and in whichever way.
• Deposit required under Assignment Agreement is an unreasonable amount or exceeds the deposits paid by the Seller to the Condo Builder.
• Deposit is being released to the Seller prior to closing of the Assignment Agreement.
• Seller does not disclose amount of occupancy charges payable for the unit.
• Revenue Canada will consider an assignment sale as fully taxable and won’t allow 50% capital gain tax exemption rule

Condo Assignment Checklist

Go through the following checklist of issues to be considered when preparing an assignment agreement of purchase and sale:

• Obtain a copy of the Condo Builder’s Underlying Agreement;
• What form of assignment agreement to be used;
• What is the original purchase price;
• What is the new purchase price;
• The amount of deposits already paid by the seller; are these deposits included in new purchase price or in addition to the purchase price as a reimbursement to the seller (the Condo Builder will provide a credit for these deposits to the seller on the final statement of adjustments);
• What is the deposit amount on the assignment transaction and who will hold the deposit – the agent/broker, the seller’s lawyer etc. – or is it to be released to the seller;
• What is the status of construction and closing dates – interim occupancy and final closing dates;
• What is the anticipated possession date;
• Has seller received notice from the Condo Builder of an extension of the interim or final closing date?
• What is the amount of the occupancy payment;
• Is there a fee to be paid to the Condo Builder’s for the consent to assignment and what is the status of obtaining such consent;
• Who is to pay for the consent and will the seller agree to share the cost;
• Is the Condo Builder’s form of assignment agreement available for review by the purchaser’s solicitor?
• What is the total amount of the closing costs payable on final closing; Have these costs been capped? Will seller agree to share these costs?
• Who is to receive credit for interest on the seller’s deposits already paid to the Condo Builder; and
• Are there any incentives/credits/upgrades to given to on final closing and will these pass on to the purchaser?

Bottom line, assignments are not for everyone, but for the right buyer and seller, working with a good real estate agent and lawyer, they can be a fantastic way to transact in real estate.

Written by  Shaffiq Dar, Barrister & Solicitor RealCorp Law Professional Corporation

Thinking of Assigning Your Newly Built Condo in Mississauga?

Assignment sales need careful handling. A good assignment deal should be a win win for all the parties (builder, buyer, seller and salespersons). If you are looking to buy a builder’s newly built condo in Mississauga, I might have a few brand new condos available for assignment sale at Square One.

Looking to buy or sell a new condo by an Assignment Sale?

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People looking to escape Toronto prices most likely to move to this cheap Ontario city

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With houses and condos in the Toronto area not getting any cheaper despite high interest rates, a tough economy, and plummeting sales numbers, people in the region are setting their sights elsewhere to fulfill their dream of home ownership.

Many took the opportunity to flee the city or the province at large over the pandemic months in a trend that has continued — especially for young people  and  immigrants .

While small towns with cheaper real estate are attractive , the GTA's sky-high prices have leaked to surrounding markets, too. And, for those who want to hold onto the city life, there are still countless options that are more economical than any Toronto area locales.

This should not be surprising to anyone. Toronto has become a playground for the rich. Sad. — Julie Hunt (@JulieHu10201560) February 6, 2024

According to a new survey from realty giant Royal LePage, more than half of people currently living in the GTA — a whopping 51 per cent — would still consider buying property in more affordable places elsewhere in Canada if they were confident they could find a job there.

(This is compared to a far less 45 per cent in Vancouver, despite that city being even more expensive than T.O.)

And where would their ideal move within Canada be? Most said Edmonton (19 per cent) due to its ultra-low cost of living. With an average home price of just $442,200 and a median household income of $95,900, the Alberta city is the fifth most-affordable in Canada for real estate as of the first quarter of this year.

A total of 14 per cent of respondents from the Toronto area also indicated St. John's, Newfoundland as a feasible option for a move — the company found home prices there to be around only $342,200 compared to a median income of $71,000, making it the seventh cheapest city on the list.

To expensive to live here ! — Terrance (@TerryMc00105607) December 23, 2023

Based on these findings, for those intent on sticking within Ontario, affordability really does trump proximity to Toronto, as Thunder Bay is a staggering 15 hour drive from the downtown core versus a more expensive (but still more reasonable than T.O.) place like London or Windsor-Essex .

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