What is an Assignment Sale?

There are several reasons why someone might want to sell the rights to their unit before it is built. Someone might have invested in a suite that won't be ready for three years, but they recently had to relocate for employment. The buyer might have to sell their contract in order to purchase a house in their new city.

Another usual scenario is where a buyer began the purchasing process while still single but later got married or found out they were expecting a child. They just discovered that the pre-construction one-bedroom suite they bought was insufficient for their expanding family.

The "assignment clause" in the purchase agreement is crucial in this situation. It allows the first buyer to assign the contract without paying a fee to the new party.

But whether you're the buyer or the seller, it's important to work with a knowledgeable realtor and attorney who can protect your interests. These kinds of business dealings are common and quite lawful.

These agreements, which are more complex than a conventional resale, involve the developer, the assignor, and the assignee. The final closing and interim occupancy are both phases of the two-stage process.

Is Buying an Assignment Worth It?

Assignment acquisitions can result in some of the best prices available in the GTA condo market because fewer people look to engage in these kinds of deals. Aside from the fact that there are fewer buyers, many real estate agents are not aware of the procedure of an assignment sale and frequently decide not to market these properties. It's possible that even attorneys don't fully understand the specifics of an assignment sale.

Buyers may be forced into competitive bidding circumstances where they may overpay for their suite because of the high demand in the resale market. You can escape fierce competition and typically spend considerably less than you would for a resale unit when you buy a contract through assignment.

The assignment condo market may be advantageous to both the buyer and the seller. By not having to wait until the building is complete before listing their property, the buyer can save time and potentially thousands of dollars.

A new unit that is already protected by the Tarion Warranty Program, which has a seven-year term, is another advantage of buying an assignment agreement. Not to add that you probably won't have to wait the typical 3–4 years for the building to be built and can move into the unit sooner!

Here Are Some Advantages For Buyers To Consider:

• Options: Are more plentiful when there aren't enough listings available on the market.
• Less competition: Fewer people look at these kinds of listings.
• Peace of Mind: When fewer individuals are aware of these sales, there is less of a risk for a bidding war. It is possible to avoid bidding wars and spending more money than you can afford only to outbid another buyer.
• You Become A VIP: You are likely to inherit VIP perks offered by the builder, such as the seven-year Tarion Warranty Program and other perks like credits, upgrades, cost-caps for future development, and more.
• More Options: Depending on how far along construction is, you could still be able to select your own upgrades, finishes, and colors.
• Negotiate: In order to unlock their equity, sellers often need to sell. With this, you might be able to discuss costs, down payments, and closing dates.
• New Condo: You won't have to wait the typical two to three years for your unit to be delivered; instead, you'll get it much sooner. Frequently, the occupancy date is just a few months away.
• Taxes: You may also benefit from lowering taxes like the GST and HST.

Selling an Assignment

Prior to the final closing date, which may take months or years, owners who wished to sell their pre-construction condos had to wait to post their condo for sale. By this point, they may have already spent a large sum on closing costs and occupancy fees.

The procedure isn't often fully understood by sellers, buyers, agents, lawyers, and even lenders, even though assignment sales are not a novel strategy in Canada compared to other countries where condos have been around for much longer. It has been rewarding for sellers to learn about assignments because it has allowed them to save time and increase their income.

These transactions are growing in acceptance. Think of it as akin to condo flipping. Sellers who transfer their property rights before or during temporary occupancy can avoid paying substantial carrying and closing costs and receive their deposits returned.

Assignment sales are often permitted by builders, but they frequently have guidelines that must be fulfilled. Despite the stringent regulations in place, you still have options.

Let's Look at the Benefits for Sellers:

• Reinvest: You are able to take your equity out and put it back into different endeavors.
• No Carrying Costs: It is avoidable to pay monthly costs like occupation fees, which might occasionally last for two years.
• No Closing Costs: You are not required to pay a mortgage or any other closing costs.
• Play The Market: Sell the condo unit before it is finished and reinvest the cash to capitalize on the booming condo market. It contributes significantly to Toronto's economy and is still expanding.