Pre-construction Condo Assignment Sale

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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

The buyer of the assignment is not buying a property from the assignor outright. They are purchasing the right to acquire the property from a third party or builder. These are the interests and rights outlined in the original agreement with the builder or original seller and the assignor’s deposit. The assignee agrees to perform all of the assignor’s obligations under the original agreement, essentially allowing the assignee to complete the final sale of the property with the original owner. 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, this can lead to numerous advantages for the buyer and the seller.

Pre-construction Project by Tridel Aqualuna

Condo Assignment Toronto

The condo maintenance fees that are originally agreed upon and outlined in your contract can be subject to change upon the registration of the building and/or with a condo board being elected. The increase can be between 10 and 15 percent. In addition to maintenance fee changes, there are a plethora of closing costs, such as developer’s fees, HST payments on all the appliances in the unit and installation fees for the utility systems, just to name a few. It’s always a smart move to add roughly 3 to 5 percent of the original purchase price of the property to your budget in order to account for these factors.

Do you pay HST on an assignment sale in Ontario?

Pre-construction Building For Assignment

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.
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