When it comes to assignment sales at The Britt, there are a lot of people who are unsure about how this all works. Assignments are not well known by the public, nor do many agents fully understand the process either! No matter the fear, assignment sales are not nearly as complicated as they appear to be when taken into the hands of an experience real estate agent, alongside an equally skilled real estate lawyer with experience in assignment sales as well. Working with an experienced real estate agent on an assignment sale means that the correct venues for marketing exposure will be maximized, the best set of contract clauses for your protection will be employed, and a whole host of pitfalls will be avoided that would otherwise cost you time and money.
Simply put, an assignment sale is the transfer of a builder’s pre-construction sales contract from one person to another. Sometimes the building is still under construction, while in other cases the unit is ready to be lived in, but in all cases, an assignment sale happens when title to the unit has not yet officially been transferred over from the builder to an owner. What an assignment sale allows to happen is for a new buyer to step into the shoes of the original buyer, in order to close the purchase of the unit with the builder.
Assignment sales in downtown Toronto have become increasing common and more visible in a buyer’s search for condo units, however, it’s not at all the same process involved as with purchasing a resale condo unit. There are significant financial considerations to think about when entertaining this idea! This also goes for a seller of an assignment unit – the process may have special tax implications for you to consider as well, which don’t normally apply to resale condo sales.
In an assignment sale, there are advantages for the assignor (the seller of the builder’s contract) and the assignee (the purchaser of the builder’s contract), some of which are outlined here:
Assignor (Seller) Pros of Selling an Assignment Contract
- Avoidance of the closing payment of both land transfers taxes (both provincial and municipal taxes) which can add up to many thousands of dollars.
- No need to arrange for a mortgage or financing of any kind for the final closing.
- Potential to make a profit on the condo without ever being an actual, documented owner on title.
- The potential to avoid paying occupancy fees if you negotiate to have the assignee take on these payments.
- Significantly less competition from other sellers in the building, since typically no advertising is allowed on the MLS and fewer units are generally for sale before a building is complete compared with after registration of the unit.
Assignee (Buyer) Pros of Buying an Assignment Contract
- The ability to purchase a brand new, never lived in unit, if you were not able to buy at the time when the project first launched. This also comes without years of waiting and having your deposit funds tied up with a builder.
- The chance to buy at a great price if the seller really needs to sell, as some assignments happen because the original purchaser cannot close with the builder and needs to assign the contract in order to avoid losing all of the deposit funds being held with the builder.
- A mortgage does not need to be arranged until the registration date, which can provide a buyer with needed time to make mortgage arrangements.
- Complete transfer of the Tarion New Home Warranty program into the assignee’s name so that they are protected from any unit deficiencies.
Partnering with an experienced real estate agent and real estate lawyer will ensure you proceed through as smooth a process as possible for a purchase or a sale of an assignment unit. Contact The Condo Lounge below to help us get the process moving forward for you.