Assignment

Thinking of Assigning?

Friday Jan 14th, 2022

Share

You've bought a pre-construction property and you are thinking of Assigning it?

Below are some common questions we get asked:

What’s an assignment?
An assignment is when a Seller sells their interest in a property before they take possession – in other words, they sell the contract they have with the Builder to a new purchaser. When a Seller assigns a property, they aren’t actually selling the property (because they don’t own it yet) – they are selling their promise to purchase it, along with the rights and obligations of their Agreement of Purchase and Sale contract. The Buyer of an assignment is essentially stepping into the shoes of the original purchaser. The original purchaser is considered to be the Assignor and the new Buyer is the Assignee. 

What can be negotiated in an assignment sale?
Because the Assignee is taking over the original purchaser’s contract, they can’t renegotiate the price or terms of the contract with the Builder – they are simply taking over the contract as it already exists, and as you negotiated it. Most Sellers of assignments are looking to make a profit, and part of an assignment sale negotiation is agreeing on price.

Builder Approval and Fees
Remember that huge legal document you signed when you made an offer to buy a pre-construction Property? It’s time to take it out and re-read it. Your Agreement of Purchase & Sale stipulated your rights to assign the contract. Some builders allow assignments but there is usually an assignment fee that must be paid to the Builder (we’ve seen everything from $750 to $30,000). There may be additional requirements as well, the most common being that the Builder has to approve the assignment.

Marketing Restrictions
Most pre-construction Agreements of Purchase & Sale from Toronto & GTA Builders do not allow the marketing of an assignment...so while the Builder may give you the right to assign your contract, they restrict you from posting it to the MLS or advertising it online. This makes selling an assignment difficult. While it may be very tempting to ignore the no-marketing rule, BE VERY CAREFUL. Buyers guilty of marketing an assignment against the rules can be considered to have breached the Agreement, and the Builder can cancel your contract and keep your deposit. We don’t recommend advertising an assignment for sale if it’s against the rules in your contract.

Have more questions regarding assigning? We invite you to contact us!


Post a comment