Condo Assignment Sales

“Assignment” of an “Agreement of Purchase and Sale” is a term commonly used when you would like to sell interests in a unit that you have bought, however do not hold title. You may or may not have possession of the unit; however, the building is not registered. During the Assignment process you are basically selling the documents which pertain to the unit, you are assigning the ownership. Assignments are very common; however you must work with a very experienced realtor and lawyer who will know how to protect your interests, whether you are acting as the buyer or seller. In the illustration below we will give a situation when working as the Seller.

You must ensure that the Agreement of Purchase and Sale signed with developer does not restrict the resale of the unit prior to registration. If it does restrict the resale of the unit, there are still ways around it, however will have to be reviewed, on a per case basis.

The next important thing to know is the costs involved in assigning. Usually developers charge a flat fees or a percentage of the original price in order to give consent to change the name of the Buyer. The builder is not concerned with the new arrangement of payment or price between you and the new buyer. The terms and conditions of the original agreement still remain in effect with the developer. Should the new buyer not fulfill the terms and conditions of the contract with the builder you as the original buyer are still liable. All of the possible costs:

Assignment Fees:

Builders typically charge the Assignor (seller) an assignment approval fee based on a percentage of the original purchase price (before taxes). Usually 1% of original price, but you should confirm this with your builder.

Closing Costs:

a. Legal Fees. Depending on the lawyer, they are usually around $1,500 including disbursements. These deals are more complex than resales and involve three parties (Assignor/Assignee/Builder) and their respective lawyers in a two-stage process (Interim Occupancy and then Final Closing).

b. Realty Fees. The Assignor (seller) pays these fees plus HST.

You the Seller shall enter into a written agreement with the new buyer. This contract is extensive and can either be prepared by an experienced realtor or lawyer. Attached to this contract should be a COPY of the original agreement entered into with the builder, condo declaration documents, PDI booklet, letters from the developer’s lawyer acknowledging payment and any other notification that may have been received. (List of upgrades, deficiencies list noted at the time of PDI, etc.)

Usually when assigning a contract you the Seller expect to receive the original down payment and any profit that may have been realized as a difference between the original purchase price and what it is being sold for. Not all buyers are in a position to make a substantial payment as it may run into thousands. Typically there are many buyers who can afford to buy only with 5 %. As mentioned an experienced realtor and lawyer can walk you through this process and help your deal from falling apart, should you decide to sell.

Builders have the right to refuse consent to the assignment and/or charge a premium should the property have been advertised on the MLS or newspapers etc. for sale prior to registration. It is essential that you continue to market the property through a realtor who has a network of clients and works specifically in the area of expertise.

To safeguard the interests of the seller, the buyer needs to make all payments (original down payment + profit) to the seller’s lawyer in trust. This amount is to be released to the seller upon successful consent from the builder or as provided for in the contract.

Why Assign A Unit?

You would like to realize your original investment and profit ahead of time.
You will not have to incur all closing costs associated with the unit when it is due for registration.
You do not need to take out a Mortgage.
Some builders restrict renting out the unit prior to registration. Limiting your options. This means you would have to add all monthly occupancy fee costs to your purchase price (until registered), increasing your overall cost of the unit and reducing your profit.