Investor guide
Assignments 101: Selling Before Closing
When an assignment makes sense, the costs involved, and how to stay on the builder's good side.
What an assignment actually sells
An assignment is the transfer of a buyer's rights and obligations under an Agreement of Purchase and Sale before final closing. The original buyer is the assignor and the new buyer is the assignee. The property itself has not yet transferred to either party.
Assignment rights are controlled by the original agreement. Some builders permit them with written consent, some impose timing or marketing restrictions, and others can refuse them.
Costs and cash flow to review
The transaction can involve a builder assignment fee, legal fees, commissions, tax consequences and a negotiated payment of the original deposits and profit. The assignee must also be prepared to complete the purchase with the builder.
- Have a lawyer review both the original agreement and assignment agreement.
- Confirm when the deposit reimbursement and any profit are payable.
- Obtain tax advice about income tax and HST treatment.
- Verify that the assignee can qualify for financing at final closing.
When an assignment may fit
Assignments can provide flexibility when a buyer's circumstances change or when an investor decides not to close. They are not guaranteed exits. Demand, comparable pricing, builder rules and financing conditions all affect marketability.
Start reviewing the agreement and likely sale window early. Advertising before builder permission can breach the contract.
Key takeaway
An assignment transfers a purchase contract, not a completed condo; builder consent, fees, taxes and buyer qualification can determine whether the strategy works.
This guide is general information, not legal, tax or financial advice. Rules, fees and program details can change; confirm current requirements with the appropriate qualified professional.