Assignment Sales Demystified: Key Information You Can't Miss

Assignment sale condo

Welcome to Assignment Sales Demystified. This guide serves as your compass in understanding the world of assignment sales.

Assignment sale condo

Assignment sales, a prominent yet often misunderstood concept in real estate, involves selling a property contract before possession. In this process, the buyer assumes the role of the original purchaser. It’s a method that allows flexibility for buyers and sellers alike, and is particularly prevalent in pre-construction or resale properties without assignment restrictions. Understanding assignment sales is paramount for anyone involved in property investment. It can be employed as an effective strategy under certain circumstances, but it also carries its own set of complexities and pitfalls. The importance, therefore, lies in having all the necessary information at your fingertips. This comprehensive guide will provide you with key information about assignment sales. From explaining what assignment sales are, to describing the different types and processes involved, it will empower you with knowledge to navigate this complex terrain confidently.

Whether you’re an investor eyeing potential opportunities, a buyer aiming to understand your options better, or simply curious about real estate intricacies, this guide offers valuable insights into assignment sales. Let’s dive in and unravel the mystery surrounding assignment sales!

What are Assignment Sales?

Assignment sales involve a unique real estate transaction where the original buyer (the assignor) sells their interest in a property contract to a new buyer (the assignee) before taking possession of the property. This type of sale allows the assignee to step into the shoes of the original purchaser, assuming all rights and obligations outlined in the agreement.

Here’s how assignment sales typically work:

  1. Initial Agreement: The assignor has a pre-existing purchase agreement with a seller or developer.
  2. Transfer of Rights: Instead of closing on the property themselves, the assignor decides to transfer their contract rights to an assignee.
  3. New Buyer Steps In: The assignee agrees to take over the contract, fulfilling all terms, including payments and conditions going forward.

The Role of the Buyer in an Assignment Sale

The role of the buyer in an assignment sale is multifaceted:

  1. Assuming Responsibilities: You must assume all responsibilities under the original contract, including payment schedules and customization choices for new constructions.
  2. Due Diligence: Conduct thorough due diligence on the property and its contractual terms to understand what you’re committing to.
  3. Negotiation: While some terms are non-negotiable, there may be room to negotiate the price and other aspects with the assignor.

By stepping into an assignment sale, buyers often benefit from a shorter timeframe to ownership and can sometimes secure a property at a price point that reflects previous market conditions.

Types of Assignment Sales

Understanding the nuances of assignment sales requires a grasp of the types of properties involved. Mainly, there are two categories:

Pre-construction Properties

This involves the assignment of a contract for a property that is not yet built. Buyers often secure a lower price early on and can sell the contract later, potentially at a profit if the market appreciates. These are popular among investors who aim to capitalize on rising real estate markets without waiting for construction completion.

Resale Properties Without Restrictions

In this scenario, an existing property’s purchase contract is assigned to another buyer. Unlike pre-construction assignments, these involve tangible assets that buyers can inspect. However, not all resale properties allow for assignments due to restrictions placed by either the seller or the condominium corporation.

Being informed about whether you’re dealing with pre-construction or resale properties is crucial in assignment sales for several reasons:

  • Contractual Obligations: The terms and conditions in an agreement of purchase and sale can vary significantly between pre-construction and resale properties.
  • Timeline and Risk Profile: Pre-construction assignments typically have longer timelines and may carry different risks compared to resales.
  • Market Dynamics: The strategies for pricing and marketing an assignment sale can differ based on construction status and market demand.

Recognizing these distinctions ensures that both buyers and sellers approach assignment sales with appropriate expectations and strategies tailored to the specific property type involved.

Reasons for Assigning

There are several reasons why an owner might choose to assign a property contract. Let’s explore some of the most common ones.

Change in Circumstances

A prime reason often lies in the fluctuating dynamics of personal or financial circumstances. For instance, you initially purchased a pre-construction condo with the intention to live there. However, due to unforeseen life changes such as relocation for work, family expansion, or changes in marital status, you decide to sell your contract before the construction completes. In this scenario, assigning your contract lets you transfer your obligations to another buyer without breaching the original agreement.

Financial Constraints

Sometimes, financial constraints can prompt an assignment sale. Say you bought a property for investment purposes. But if unexpected financial difficulties arise – job loss, health issues causing income disruption – maintaining regular payments might become challenging. Assigning allows you to pass on the financial obligation to an assignee while potentially recovering some or all of your initial investment.

Speculative Investment

Assignments are also used as a speculative investment strategy. Here’s how: You purchase a pre-construction property in a rapidly appreciating market with no intention of closing on it yourself. Instead, your goal is to sell the assignment contract at a higher price before completion, profiting from the increased market value without ever taking possession. Speculative investment isn’t devoid of risks. Market conditions can change rapidly and unpredictably. If property prices decline during construction, finding a willing assignee at a profitable price could be difficult.

In essence, assignments offer flexibility and potential profit opportunities but come with their unique challenges and risks. It’s crucial to analyze your situation carefully and seek professional advice before deciding on assigning a property contract.

Process and Considerations for Assigning

The assignment process can be intricate, requiring careful consideration and planning. Negotiating with the Seller is a critical initial step.

Negotiating Toronto Assignment

1. Negotiating with the Seller

When you engage in an assignment sale, you are effectively stepping into the shoes of the original buyer. This means that you will be taking over all the terms and conditions outlined in the original contract, therefore, it’s important to use a knowledgeable agent thoroughly review the contract terms before agreeing to an assignment sale. These may include:

  • Agreed price
  • Deposit amount
  • Closing date
  • Any other conditions or contingencies

In addition to accepting the original contract terms, as an assignee, you also have the opportunity to negotiate the price with the seller. Unlike traditional real estate transactions, where negotiations revolve around a single price – the purchase price – in assignment sales, there are two important figures to consider:

  1. The original purchase price (the amount originally agreed upon by the assignor and builder)
  2. The assignment fee (the amount paid by the assignee to the assignor for assuming their role under contract)

The total cost for an assignee will be a combination of these two amounts. Negotiating can be tricky due to these dual aspects of pricing; however, seasoned investors and savvy buyers can often find opportunities for value in this complexity. For instance:

  • If you believe that market prices have risen significantly since when the original contract was signed, paying a higher assignment fee could still result in a great deal.
  • Alternatively, if market conditions have cooled or if the assignor is motivated to sell quickly due to financial or personal reasons, you may be able negotiate a lower assignment fee.

Remember that each negotiation is unique and dependent on various factors such as market conditions, individual circumstances of both parties, and specifics of the property itself. It is recommended that you seek professional advice from a real estate agent experienced in assignment sales and a lawyer who can help you navigate this process. As an assignee, your ability to negotiate effectively can significantly impact the overall value of the deal. Therefore, understanding the dynamics of these negotiations is critical in an assignment process.

2. Builder Approval and Fees

When you’re engaged in an assignment process, securing builder approval is a critical step. Builders typically reserve the right to approve any assignments before they can proceed. This is done to maintain control over who ultimately purchases the units and to ensure the new buyer upholds the original contract terms.

Builder Approval

Here are the key points to understand about builder approval:

  • Securing Consent: You must request and receive consent from the builder for the assignment. Without this approval, the assignment cannot legally occur.
  • Review of Original Contract: The builder will review the original contract terms to ensure that any obligations are satisfactorily passed on to the new buyer.
  • Contractual Obligations: As a buyer entering an assignment sale, you accept all terms and conditions of the original agreement with the builder.

Marketing Restrictions

Builders often impose marketing restrictions to manage the sale of their properties effectively. These can include:

  • Advertising Limitations: Restrictions on public advertising, which may require you to market the property privately or through specific channels.
  • Controlled Release of Units: Limiting assignments to prevent a flood of units on the market that could compete with the builder’s direct sales.

Fees Associated with Assignments

Understanding fees involved in an assignment sale is essential for both assignors and assignees:

  • Assignment Fees: Builders may charge a fee for allowing an assignment, which varies depending on the development.
  • Administrative Costs: Additional administrative costs may be incurred during the process of obtaining approval.

By grasping these considerations, you prepare yourself for successful navigation through the complexities of assignment sales. Remember, each development may have unique requirements; diligence is key when reviewing contracts and approaching builders for approval.

3. Finding Potential Buyers

The assignment process may feel overwhelming, especially when it comes to finding potential buyers. But don’t worry, there are experts who can help you with this crucial step.

How Realtors Can Help

Realtors who specialize in assignments play a vital role in connecting sellers with interested buyers. Here’s how they can assist you:

  1. Understanding Assignment Sales: These realtors have in-depth knowledge about how assignment sales work. They know how to communicate the original contract terms and negotiate prices with potential buyers on your behalf.
  2. Extensive Networks: Realtors have extensive connections within the real estate industry. This network can help them locate potential buyers who are specifically interested in assignment properties.
  3. Effective Marketing: Specialized realtors have access to databases and marketing platforms where they can advertise your assignment listing. This exposure makes it easier for potential buyers to find your property.

Remember, not all realtors have experience with assignment sales. So make sure to choose one who specializes in this field for a smoother transaction.

4. Tax Implications

When you engage in the assignment process, understanding tax implications is critical for both assignors and assignees. This knowledge is a key factor in ensuring that the financial outcomes of an assignment sale meet your expectations.

For assignors:

  • The profit from the sale of the assignment is generally taxable as income.
  • If you incur a loss on the assignment sale, it may be deductible against other taxable income.

For assignees:

  • You are responsible for paying land transfer taxes upon the final closing of the property.
  • Harmonized Sales Tax (HST) may also be applicable, especially for new construction homes or condominiums.

It’s important to note that when an assignee negotiates the price with the seller, they are not only agreeing to take over the original contract terms but also assuming potential tax liabilities. Key considerations include:

  • Assignors must report profits from assignment sales to Canada Revenue Agency (CRA).
  • Assignees must budget for land transfer taxes and HST payments, which can be substantial.
  • Professional advice from accountants or tax advisors familiar with real estate transactions can provide clarity on these obligations.

By having a comprehensive understanding of these financial responsibilities, you can make well-informed decisions throughout the assignment sales journey.

5. Costs Involved

When delving into the assignment process, you must consider a variety of costs beyond the purchase price negotiated with the seller. These expenses are crucial to calculate upfront to understand the total financial commitment involved.

What are the costs associated with an assignment sale?

Here are some common costs you may encounter during an assignment sale:

  1. Builder Assignment Fees: Developers often charge a fee to allow an assignment to take place. This fee can vary greatly depending on the developer and should be verified early in the process.
  2. Real Estate Commission: If you engage a realtor to facilitate the assignment sale, commission fees apply. Typically, this is a percentage of the sale price and is subject to negotiation between you and your agent.
  3. Legal Fees: Legal representation is critical during assignment sales, ensuring all contractual obligations are met and protecting your interests. Lawyers will charge for their services, which could include reviewing contracts, facilitating negotiations, and executing the transfer of rights from assignor to assignee.

Why is it important to consider these costs?

These costs collectively impact the bottom line of an assignment transaction. As an assignee or assignor, thorough due diligence ensures that you are financially prepared for these expenses. It’s also advisable to consult with professionals who specialize in such transactions for tailored advice and accurate cost estimations specific to your situation.

Entering into an assignment sale armed with knowledge about these fees helps ensure there are no surprises during the transaction.

6. Closing Process

Understanding the closing process in assignment sales is crucial. This process involves two distinct closings.

The First Closing: Assignor-Assignee

The first closing takes place between the assignor (the original buyer) and the assignee (the new buyer). This is where the assignee steps into the shoes of the assignor, taking over all of their rights and obligations under the original Agreement of Purchase and Sale. The assignee also negotiates the price with the seller during this phase.

The Second Closing: Assignee-Builder

The second closing is between the assignee and the builder. This is when the property officially changes hands from the builder to the assignee, and it occurs once construction of the property is complete.

In between these two closings, there’s an interim occupancy period. During this time, while construction is being finalized, occupants are allowed to live in the unit but do not yet hold title to it. Understanding this interim period is essential as it affects costs and responsibilities.

Here are key points to remember:

  1. Two closings: Assignor-Assignee and Assignee-Builder.
  2. The first closing involves taking over original contract terms.
  3. The second closing happens upon completion of construction.
  4. An interim occupancy period exists between these two closings.

Remember that each stage in an assignment sale comes with its own set of considerations and potential complications. As such, it’s vital to work closely with knowledgeable professionals who can guide you through this process.

Pros and Cons of Assigning

When considering whether to engage in an assignment sale, it’s crucial to weigh the pros and cons. This will help you make a well-informed decision based on your unique circumstances and goals.

Pros of Assigning

Assigning a property contract can offer several significant advantages:

  1. Quicker Profit Realization: An assignment sale allows you to realize profits from the property earlier than if you waited until completion. This can be particularly beneficial if there has been a notable increase in the value of the property since purchase.
  2. Avoid Certain Taxes: As an assignor, you are not required to pay land transfer taxes or HST, as these become the responsibility of the assignee.
  3. Financial Flexibility: If your financial circumstances change, assigning your contract can provide a way out without the need to go through the full ownership and selling process.
  4. Reduced Risk: By assigning your contract, you can mitigate risks associated with market fluctuations or potential construction delays.

Cons of Assigning

While assignment sales may seem attractive due to quicker profit realization, no land transfer taxes, and no HST payment, it’s important to also consider the potential drawbacks.

  1. Smaller Buyer Pool: Not all buyers are comfortable or familiar with assignment sales, which can limit your pool of potential buyers.
  2. Potential Lower Sale Prices: Due to the smaller buyer pool and some uncertainties associated with assignment sales (like construction timelines), you may not achieve as high a selling price as you might with a traditional resale property.
  3. Complex Process: Navigating an assignment sale can be more complex than a standard real estate transaction due to additional legal requirements and potentially complicated contract terms.
  4. Risk of Builder Restrictions: Some builders may not allow assignments or may impose restrictive conditions, limiting your ability to sell.

One significant disadvantage is the smaller buyer pool. Assignment sales are less well-known than traditional real estate transactions. The complexity and unique aspects of these transactions can deter some potential buyers. This results in a smaller pool of interested parties, which can make it more challenging to sell the property contract. Additionally, marketing restrictions can further narrow the buyer pool. These restrictions often limit how you can advertise the sale, making it harder to attract potential buyers. Another downside is the potential for lower sale prices. Since assignment sales are less competitive than traditional real estate sales, sellers may need to accept lower offers to close the deal. In comparison to resale properties, assignment sales might not fetch as high a price. Lastly, unforeseen complications can arise with assignments that can lead to legal implications or financial losses. Hence, understanding all aspects of an assignment sale is essential before entering into such a transaction.

While these points highlight some general pros and cons of assigning, each situation is unique. What works for one person might not work for another. Therefore, it’s advisable to seek professional advice before deciding whether an assignment sale is the right path for you.

Tips for Successful Assignment Sales

Navigating the intricacies of assignment sales demands the expertise of professionals who are well-acquainted with this niche market. Partnering with an experienced agent ensures that you have someone on your side who understands the complexities of these transactions and can effectively market your property to a targeted buyer pool. An adept agent will streamline the process, provide vital market insights, and assist in securing the best possible terms for your contract.

Role of Lawyers in Assignment Sales

  • Legal Guidance: A proficient lawyer plays a crucial role by offering legal advice, ensuring that all contractual obligations are met and helping navigate through builder restrictions and assignment fees.
  • Contract Review: They meticulously review the terms of the original purchase agreement and the assignment contract to safeguard your interests.
  • Closing Assistance: Lawyers facilitate a smooth transition from contract assignment to final closing, addressing any legal challenges that may arise.

Considerations for Non-Resident Sellers

If you are a non-resident seller looking to assign a property in Canada, it is essential to be aware of tax implications and regulations:

  • Tax Obligations: Non-resident sellers need to understand their liability regarding capital gains tax and ensure compliance with Canadian tax laws.
  • Clearance Certificate: Obtain a clearance certificate from the Canada Revenue Agency (CRA) as part of the transaction process.
  • Assignment Fee: Be prepared to pay an assignment fee to the developer, which is often stipulated in the original purchase agreement.

By aligning yourself with seasoned real estate professionals, you place yourself in a position to navigate the complexities of assignment sales with greater confidence and precision.


When considering assignment sales, it’s important to have a clear understanding of how these transactions work. Whether you’re the one selling the assignment (assignor) or buying the assignment (assignee), knowing the ins and outs of assignment sales can make a big difference in your real estate journey.

Here are some key takeaways to remember:

  • Understanding Benefits and Risks: Being knowledgeable about assignment sales allows you to assess the potential financial benefits and weigh them against the risks involved.
  • Navigating Legalities and Obligations: Having a good grasp of the legal aspects helps you navigate through contractual terms and fulfill your obligations with confidence.
  • Assessing Financial Implications: Understanding the tax implications and cost breakdowns associated with assignment sales enables you to make informed decisions that align with your financial goals.
  • Identifying Opportunities for Profit: Knowing how to spot opportunities and effectively leverage assignment sales can give you an edge in the real estate market.

By arming yourself with this essential knowledge, you’ll be better equipped to approach assignment sales in a responsible and strategic manner. The subsequent section continues this exploration by introducing, a valuable resource for those who want to dive deeper into assignment sales or explore potential opportunities in the market.

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For those interested in delving deeper into the world of assignment sales or seeking market opportunities, offers a wealth of resources. You can find detailed guidance on navigating the complexities of assignment sales, as well as listings for potential assignments that can be a strategic fit for your investment portfolio.

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Utilize the expertise and tools available at to make informed decisions and capitalize on the benefits of assignment sales in the real estate market.