What is an assignment sale?
An assignment of an agreement of purchase and sale is when the original purchaser of a condominium/house assigns or sells his contract (agreement of purchase and sale) with the builder to a new purchaser. Once the unit is assigned, the new purchaser becomes responsible for completing the transaction with the builder.
When is a person allowed to assign a contract?
In order to assign a dwelling, the “assignment clause” must be included in the original contract with the builder. Some builders include the clause automatically while some may approve or reject it upon request. Often times there may be a fee associated to assigning the contract.
Why does someone buy a dwelling through assignment?
If, for whatever reason, a person missed an opportunity to buy a dwelling from a builder in a desired project, they may try to acquire a property through assignment. This would involve contacting buyers who already bought in the development and asking them if they are interested in assigning their contract.
Is an assignment right for you?
The original contract should be thoroughly read and a buyer must assess if the deal makes sense for them. In most cases, the new purchaser is required to give the original purchaser all the monies he/she has paid to the builder and any extra equity agreed upon by the two parties, upfront. Therefore, assignment deals are typically known to be cash heavy deals. The new purchaser should contact a lawyer and they will advise them on any outstanding fee’s or closing costs.
What should both parties be talking about regarding the assignment sale?
Both parties should be discussing such topics as:
- Who will pay the Land Transfer Tax?
- Who will pay for any disputes regarding HST/Taxes?
- Who will be responsible for all closing costs?