A Detailed Discussion on Toronto Condo Assignment- Everything You Need to Know in Detail

Many people share the dream of purchasing a new condo in Toronto. With growing populations, the city has seen a boom in property construction over recent years. So, if you are ready to purchase your dream property in Toronto, we recommend you take the first step. With an option of purchasing properties on assignment, buyers/investors can purchase properties prior to its closing, depending on the builder’s discretion. However, the original purchaser must have the assignment clause in their agreement of purchase and sale. Read further to learn more about condo assignments in Toronto and the GTA.

What is a Condo Assignment?

In the simplest terms, pre-construction condo assignments are when an original purchaser of the pre-construction property sells the contract bought from the developer to a new purchaser prior to the closing of the property. Where the original purchaser must have an assignment clause in their agreement of purchase and sale to proceed with an assignment sale. In terms of an assignment sale, the original purchaser would be called the ‘assignor’ and the new purchaser would be called an ‘assignee’.

It is important to acknowledge that when purchasing an assignment, the assignor is not selling the property, instead selling their interest and rights in the original agreement of purchase and sale with the builder, and the assignee assumes and agrees that they would fulfill the assignor obligations set out in the original agreement of purchase and sale by the builder. However, when purchasing and selling an assignment, it is important and highly recommended to review the agreement of purchase and sale with your lawyer and accountant. Providing an opportunity to better understand the agreement of purchase and sale terms, conditions, tax and GST/HST implications. If you are interested in buying or selling an assignment in Toronto or in the GTA, call us today to book an appointment with our highly experienced and knowledgeable team to learn more.   

Are Assignments Permitted?

It is important to take into consideration that not all builders allow the assignments sale Be sure to check that your agreement of purchase and sale provides an assignment clause and check if there are any additional costs associated with an assignment sale from the builder/developer. Even if the builder/developer provides an assignment clause, they can still refuse the assignment sale. Condo assignments are also permitted unless the contract expressly forbids it. However, it is also important to work with a real estate agent who is experienced in assignment sale processes, so if you are interested in purchasing or selling an assignment property in Toronto, give us a call to learn more.

Below are five steps in the process of condo assignments.

Assignor- the original buyer of the condo, Assignee – the new purchaser of the condo

1. The assignor hires a real estate agent for the assignment sale. The assignor should also review the agreement of purchase and sale with their lawyer and real estate agent to find conditions within the assignment clause. As some builders may not permit you to market the assignment sale on MLS.
2. The assignee will put a conditional offer to the assignor. Where, it is highly recommended that the assignee and assignor both review the offer during the conditional period with their accountant and lawyer who have extensive experience in the assignment sale process to understand any potential GST/HST, tax implications and terms/conditions within the offer. It is also important to review the assignment contract and the original agreement of purchase and sale with your mortgage broker or lender to understand your financing situation.
3. The offer terms and conditions are accepted by both the assignor and assignee
4. The assignor will request approval from the developer for the assignment sale
5. After all steps are cleared, the assignment sale would be finalized.

How is an Assignment Different from a Typical Real Estate Investment?

Purchasing an assignment property differs from purchasing a regular real estate investment. In the sense that you are not buying physical property at the time of purchase. Instead, you are purchasing another buyer contract with a builder. On the other hand, other types of real estate investments like resale properties are being bought after its completion. It is important to consider your investment objectives when looking at what type of real estate investment best suits you, whether an assignment purchase would be right for you or another type of real estate investment.

Trust Condos Can Help

Whether you are looking for a newly constructed condo in Toronto or a condo assignment, our team will provide knowledgeable assistance and insight throughout the transaction journey. Maintaining a vast database of properties and assignment sales of condos throughout Toronto and the GTA. If you are interested in learning more about opportunities for assignment sales, call us today to learn more or set an appointment to purchase your dream investment property or property for living.

The information on this blog is based on our experience. Readers/users are strongly recommended to obtain independent property, mortgage, legal, tax or accounting advice. The information displayed is for reference only and is without any representations and warranties.