An assignment sale, in essence, is the transfer, or “assignment,” of a contract to buy a suite in a pre-construction condominium. This type of sale is typical for condominiums that are pre-construction and not yet registered, meaning the actual unit can’t be owned just yet—only the contract for purchase can be transferred.

When you buy a unit in a pre-construction condo in Ontario, the contract typically includes an assignment clause or right. This allows you the option to sell your ‘assignment’ before the construction of the condominium is completed.

In an assignment sale, the Assignee (or Buyer) isn’t directly purchasing property from the Assignor. Instead, they are acquiring the “right” to obtain property from a third party, typically the builder. The Assignor transfers their interest and rights in the original agreement made with the builder or original seller, along with their interest in the initial deposit. The Assignee, in turn, agrees to take on all obligations under the original agreement.

The actual transfer of ownership happens once the building is constructed and registered by the city. Until then, the transaction is essentially the sale of a contract. As we will explore, there are numerous benefits for both buyers and sellers in such sales.

In this article, we delve deeper into the concept of assignment sales, their uses, the transaction process, and how rights can be transferred.

Our goal at Meta Realty Inc. is to arm you with extensive knowledge about the pre-construction market in Ontario. With this information, you can make a more informed decision about whether an assignment sale is the right investment for your future.

Assignment sales offer potential advantages for both buyers and sellers, making them a unique and often lucrative aspect of the Ontario real estate market.

The scenario provided offers a fundamental understanding of an assignment deal in Ontario’s condo market. However, it’s important to recognize that this is a simplified overview. Real-life assignment sales can involve more intricate details, such as specific mortgage rules and other contractual nuances.

For a deeper dive into this topic, or to discuss specific situations, feel free to reach out to our team. We’re passionate about condos and always eager to share our expertise! Remember, each assignment sale comes with its own unique set of rules, terms, and conditions.

If you’re considering buying or selling a pre-construction assignment, we strongly recommend seeking advice from a specialized real estate agent, a knowledgeable lawyer, and a tax accountant. This is crucial because assignors might face tax implications on any profits made from the sale.

It’s noteworthy that most builders in Ontario are open to assignment sales, and you can often find such listings on platforms like REALTOR.ca. However, it’s essential to be aware of and adhere to the rules set out in the original purchase agreement. Assignment sales are more complex than standard real estate transactions, mainly because a mortgage can only be secured after the building’s registration, not at the closing of the transaction. Other considerations, such as the terms of occupancy, reimbursement of the seller’s deposits, and various legalities, also play a significant role in these deals.

Are assignment purchases in the GTA condo market a worthwhile investment? The answer leans towards a resounding yes, especially for those looking for exceptional deals. Assignment sales are often overlooked, making them a less competitive and more advantageous option for buyers.

A significant factor contributing to this scenario is the lack of awareness among many real estate agents and lawyers about the nuances of assignment sales. This lack of familiarity can lead to fewer advertised listings, providing savvy buyers with unique opportunities.
In the bustling resale market, the intense demand often sparks bidding wars, escalating prices and leading buyers to potentially overpay for their chosen units. Opting for an assignment sale circumvents this competitive frenzy, usually resulting in more favorable pricing compared to resale units.

Assignment sales are mutually beneficial in nature. Sellers gain the flexibility to list their units before the completion of the building, while buyers can enjoy potential savings in both time and money.

A standout advantage for buyers is acquiring a brand-new suite, complete with the seven-year Tarion Warranty Program. This assurance of quality, coupled with the likelihood of moving in sooner – often bypassing the usual 3 to 4-year wait – adds to the appeal of assignment sales.

• Diverse Options: A larger pool of choices, especially beneficial when listings are scarce.
• Reduced Competition: Fewer buyers targeting these listings means less likelihood of bidding wars.
• Cost Savings: Avoid overpaying in competitive bidding situations.
• VIP Perks: Inherit incentives like the Tarion Warranty and other builder offers such as credits, upgrades, and capped development charges.
• Customization Potential: Depending on the construction stage, there may be flexibility in selecting finishes and upgrades.
• Negotiation Leverage: Sellers often need to liquidate their equity, giving buyers an edge in negotiating prices, deposits, and closing dates.
• Accelerated Ownership: Gain access to your new unit faster than in standard pre-construction contracts, often just months away from occupancy.
• Tax Advantages: Potential savings on taxes like GST and HST.

In the traditional real estate scenario, owners of pre-construction units had to patiently wait, often for months or years, until the final closing date to officially list their suites for sale. This waiting period typically involved substantial expenses in terms of occupancy fees and closing costs.

Assignment sales, while not a novel concept in Canada, are less understood here compared to countries with a longer history of condominium development. This lack of widespread knowledge spans across sellers, buyers, real estate agents, lawyers, and even financial institutions. However, sellers who have invested time in understanding the assignment sale process have found it to be a lucrative strategy, allowing them to save time and maximize profits.

The trend of assignment sales is gaining momentum, akin to a form of condominium flipping. It enables sellers to transfer their property rights either during or before the interim occupancy phase, helping them avoid significant carrying and closing costs. This process is particularly beneficial as it allows sellers to recover their deposits more efficiently.

Most developers in the condo market are open to assignment sales, though they typically have specific rules that need to be adhered to. Despite these regulations, sellers still have viable options for managing their property investments.

• Financial Flexibility: Assignment sales act as a safety net, allowing sellers to release their equity and withdraw from the agreement if their circumstances change and they no longer need the unit.
• Avoidance of Carrying Costs: Sellers can sidestep ongoing expenses, such as occupancy fees, which in some cases can extend for up to two years.
• Elimination of Closing Costs: There’s no need to secure a mortgage or bear any other closing costs typically associated with property transactions.

For those considering the sale of their pre-construction unit in Ontario, understanding and leveraging the advantages of assignment sales can offer a practical and financially beneficial alternative to traditional real estate transactions.