A guide to buying condos on assignment
Jordon Scrinko
Published by Jordon Scrinko
Last Updated On: August 24, 2023

The Definitive Guide to Buying Condos on Assignment

The real estate market is one of the most powerful sectors of the economy. If you are located in Toronto, you must have caught the term “Assignment Sale,” owing to its reputable growth rate across the city. However, it is fairly offbeat from a typical estate transaction.

If you are seeking to crack the code of buying condos on assignment sale at any place, there is a legion of intricacies you need to know before heading forward.

This article will walk you through their gravity in the present day, and all the specifics you should know you before navigating into an assignment sale.

Everything you need to know about an Assignment in real estate

An assignment in real estate is a sales transaction, wherein an original buyer (the assignor) offers another buyer (the assignee) an acquisition over the assignor’s equity.

This lies before the assignor takes over, or “closes” the property. It is the assignee who ultimately seals the deal. To describe it in simple words, an assignor auctions their interest in a property (a building) to the assignee, in advance of taking possession of the estate.

An assignor does not “sell” a property naturally, because they do not own it yet. Rather, they comply with the promise made to the builder to buy it. This is along with their obligations and claims of the Agreement of Purchase and Sale contract, by selling it to the assignee.

The bottom line is, that the assignee essentially steps into the shoes of the assignor in this role-reversal of an endowment. In Toronto, property assignments are far more prevalent in pre-construction condos.

An assignment sale in the pre-construction condo market


An assignment sale in the sphere of the condo market refers to the “assignment” of a contract to take over a pre-construction unit wing. Additionally, it implies that no individual can attain authority over the title of the condo since the building has not been registered yet.

It is lawful to offer the contract to another buyer. Subsequently, after the building is registered, the assignor can sell the condo, together with the title. Such sales are extremely common amid the construction stage of new developments.

Umpteen real estate connoisseurs believe in buying condo units on assignment sales. In some cases, builders don’t permit buyers to foster contracts to an assignee.

Occasionally, they only do so after being paid an amount of assignment fee, which can hike as steep as $7000. Therefore, builder approval to offer a contract is an innate prerequisite.

The schema of an assignment process: A glance

As mentioned earlier, after you invest in a pre-construction condo, you will receive an assignment clause, akin to a contract. You can then choose to sell the condos even before the completion of its building. Flip through the following points to attain lucidity over an assignment process:

  • An assignee does not buy a property from an assignor. Rather, they will buy the “right” to procure the condos from a third-party source, the builder.
  • The assignee entrusts its perks and rights within the original contract with the builder, who is the original seller.
  • Along the assignment process, the original person who bought the property must sign an Agreement of Purchase and Sale (1). This enlists an Assignment Agreement Clause, designating the right to offer the contract under a few conditions.
  • An assignee concedes to meet all of the assignor’s obligations under the original purchase.

Why do assignment sales take place for condos?


Usually, with pre-construction unit sales, there lies a long hand-back between the duration wherein a buyer can occupy the condo and the assignment closing date. It is fairly anticipated that buyers’ circumstances to modify over time.

It can be anything; a transferable job, a change of heart, marriage, a new set of responsibilities to cater to, etc. In essence, what fashioned for a person five years back, doesn’t always work within sight of the final closing date.

Another common reason why purchasers seek to indulge in a condo assignment sale depends on the original purchaser’s financial footing. Perhaps, the buyer does not have sufficient funds in hand to wrap the sale up and make it to the closing date of the building. Moreover, it’s rather cheaper to offer the contract to an assignee, than it is to cop out on a builder!

Lastly, assignment sales are also mutual to individuals who are simply reckoning to “flip” a pre-construction condo unit. These speculative investors carry no intention of reaching the final closing date.

Some buyers maneuver profit by “flipping” pre-construction condos for occupancy. Additionally, this is another strategy to avoid paying for closing expenses and incur capital benefit over their original purchase.

Advantages of buying a condo on assignment sales

An assignment purchase can accord you some of the greatest deals in the province of real estate. But many purchasers miscalculate all the ins and outs of it when it comes to purchase and sale.

Let us examine a few reasons why assignment sale agreements for condos have the upper hand in the realm of the purchase and sale contract:

1. You can buy a brand-new condo at a low purchase price

By buying a state-of-the-art condo on assignment sales, you’re likely to purchase a product that has been off the market for quite some time. After a significant duration of time, the price of a condo unit per square foot abates, when set against today’s pre-construction price.

Therefore, you can acquire a new condo at a fairly reasonable price which is just a vaporous thought in today’s market! So, why give any extra money?

2. Inherent equity for the condo

One of the key reasons why it is worthwhile to purchase a condo on assignment lies in its ability to construct equity during the building process. This means that when a purchaser is selling a condo unit before its closing date, he/she typically leaves a portion of the equity that the condominium has churned out for you to inherit.

Toronto’s assignment market has always remained powerful, with even pre-construction condos generating remarkable equity every year.

3. Availing agreement perks

Post the assignment transaction, purchasers are eligible to avail of the Tarion warranty program, which offers years of warranty against errors and defects with your condo unit. Also, this program will cover all your warranties for newly installed appliances.

Additionally, you will redeem several VIP incentives like upgrades, credits, and capped developing charges from the builder.

The non-negotiable aspects of assignment sales for a condo


Since assignees take charge of an original purchaser’s contract, they are not given the liberty to renegotiate the price of the condo, along with the terms and conditions embodied in the agreement of purchase with the builder.

They simply receive the contract as it exists.

These assignees have to replicate the deposits that assignors make to the builder.

Therefore, in place of a 30% payment made by the assignor, the assignees usually mirror the same.

The tax implications of assignment sales


First and foremost, the only reliable source to attain solid tax advice in Toronto comes from a certified accountant or lawyer.

After the registration and the final closing date of your condo unit, you’ll be solely liable for all kinds of closing costs. Some developments even include the education and development price, Tarion legal fees, and HST on appliances.

Generally, incurring any profit from an assignment obligates you to give money as a form of tax.

Additionally, losses can be written off too. The assignees will be held accountable for paying the land transfer tax or any due HST.

The following payments are not financed in addition to a mortgage. Therefore, these are to be paid by an assignee:

  • Land transfer tax
  • Municipal levies
  • HST/GST rebate
  • Legal fees and disbursements

HST Rebate


A builder’s price within the Agreement of Purchase relies on an “assumption.” According to this assumption, the buyer is using the pre-construction condo as a Primary Residence after the purchase.

Therefore, as a buyer, you qualify for a hold of the HST Rebate that later goes to the builder.

Due to this assumption, the assignee is under an obligation to assign back their entitlement of the HST Rebate to the builder.

This way, the builder acquires most of the HST rebate from the government, and you do not need to offer any money, in addition to your sale price.

This assignment of the HST payment tax is incurred at the time of the final closing. By assigning it, the purchase price of the condo remains, as stated in the Agreement of Purchase.

Builder approval to accredit an assignment

The huge legal document signed during the purchase of a pre-construction condo is your holy grail during the assignment process.

The condo on assignment clause stipulates the assignor’s right to assign the contract of the building. While a majority of builders authorize assignments, there’s a legal fee that needs to be paid to them. In some cases, other implications might accompany the legal fee payment.

Marketing restrictions followed by an assignment sales

Most of the condo on assignment sales agreements from Toronto builders do not permit the endorsement of an assignment. While the builder may offer you the rights to sell your contract, they prohibit you from posting the sale to the MLS. This makes the selling process extremely taxing.

Your submission to the land transfer agenda requires you to maintain caution to avoid legal issues and unnecessary interaction with lawyers. This means that it is imperative to steer clear from flouting the no-marketing rules.

A builder can cancel the buying contract, and confiscate the deposits if purchasers are culpable of breaching the legal agreement rules.

How to find a buyer with a no-marketing policy?

Do not sweat on it! There are professional realtors for property sales who boast a database of potential assignees. Therefore, the easiest option to sell the assignment is to hire an expert realtor who knows the ins and outs of assignment sales.

What goes behind the closing of an assignment?


There are two closings with pre-construction assignment sales. One lies between the assignor and the assignee. The other lies between the assignee and the builder for the occupancy.

With the former closing date, the assignor collects their deposit and additional profit from the assignee. With the latter, the assignee must give the remaining price to the builder (generally, with the assistance of a mortgage).

The land transfer taxes are to be paid as well. This is when the title of the condo shifts from the owner to the assignee.

There’s another closing of assignment sales after the buyer holds possession of the condo unit, but doesn’t own it yet. This is the interim occupancy period. Here, the interim occupancy occurs when the condo is equipped for occupancy, but not prepared for the registration.

In Toronto, the time of an interim occupancy period varies from a few months to years. During this occupancy period, the buyer takes over the unit and has to take care of the combined price of the mortgage, taxes, and the condo (2).

Buying a condo unit on assignment sale tips

Are you planning to buy a condo on assignment sale? Here’s what you need to consider before making the purchase:

1. Give importance to the closing date

Before opting for a condo on assignment sales, you must study the following dates:

  • Assignment closing date: When the assignment sale transaction is complete with the original buyer.
  • Occupancy closing date: The initial closing date after the buyer receives the condo unit’s key from the developer.
  • Final closing date: The title and contract of the property will be transferred to the buyer.
  • Closing costs dates: When the assignee will pay the selling price to the developer.

2. Mortgage approval

For the developer (the builder) to support the transaction, you have to air evidence of sufficient funds to testify your capability of buying the pre-construction condo. You can seek aid from an expert lawyer or consultant, who can stock a decent mortgage registration for you.

The price eligible for a mortgage is at par with the selling price, minus the down payment paid to the developer (the builder).

3. Closing costs

When you buy condo unit assignments, you are held accountable for all closing costs after the building is registered. These costs state the registration of your mortgage for occupancy of the condo. Therefore, look into the registration activity of the building closely.

4. Hire a professional real estate broker

Using a seasoned broker for buying a condo, who is familiar with assignment sales, enables your transaction to proceed smoothly. Similar is the case with your property lawyer or mortgage broker. Assignments involve a lot of complicated paperwork when set against a typical real estate transaction.

You will find various experienced and registered agents and lawyers in Toronto to help you.

5. Can you make the down payment?

Obtaining condo units on assignment contracts involves a substantial amount of investment. This is because of the following reasons:

  1. You are liable for 20% of the down payment that is paid by your seller to the builder.
  2. You have to pay the difference capital between the current asking price, or the new selling rate of the condo, and its original value.

Get the condo “flipping”


Assignments sales are a tried-and-tested strategy in Toronto. For land investors who know the right ways to pursue this business with fitting acquisition strategies, it’s a significantly low-risk and lucrative method to build serious wealth in real estate.

Today, assignment transactions are gaining massive popularity amongst sellers across Canada. Even sellers have been reaping plenty of rewards by maximizing their profits and saving time. Most developers allow assignment transactions, followed by certain rules.

Even with the strictest precedents, buyers and sellers have boundless options to achieve monumental profit while plunging into assignment sales for condo buildings!

See Precondo for more information on pre-construction condo properties for sale.


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