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A person, company or entity who transfers rights they hold to another entity. The assignor transfers to the assignee.

For example, a party (the assignor) that enters into a contract to sell a piece of property can assign the proceeds, or benefits of the contract, to a third party (the assignee)

Many people cringe at the idea of an assignment sale – they are not well known by the public, nor do many agents fully understand them either! Still, when handled by an experienced agent, they are not nearly as complex as they seem and can in fact follow with some significant advantages for both parties involved.

Quite simply, an assignment sale happens when a person purchases a builder’s agreement from another individual. In these cases, the building is not 100% finished and the builder has not yet transferred title for the unit to the buyer. The property only exists at that stage as a contract to close on the purchase in the future. Therefore, what essentially happens is the builder agrees to switch the name on the purchase and sale agreement from one person to another, and that new person then takes on the responsibilities of the contract and is allowed to close and gain title to the unit when the property is 100% complete.

In downtown Toronto, assignment sales are common with condos, and may happen anytime between when a building is in the infancy of its construction to the time when it is nearly complete. Even though some condo units may appear finished, and you can walk through or potentially even be able to live in them, the sale may still be considered an assignment if the builder has not yet transferred title for the unit to the person named in the purchase and sale agreement.

Since the usual “buyer” and “seller” terminology doesn’t quite work here because we’re dealing with the transfer of a contract, let’s use the official terminology: Seller = Assignor (the original owner of the contract), Buyer = Assignee (the new buyer of the contract).

There can be pros for both the assignor and the assignee in an assignment sale, some of which are mentioned here:

Assignor Pros

  • Avoidance of land transfers taxes (both provincial and municipal taxes which can be hefty!).
  • No need to arrange for a mortgage or financing of any kind.
  • Potential to make a profit on the condo without ever being an actual, documented owner on title.
  • The potential to avoid paying occupancy fees if you negotiate to have the assignee take on these payments.
  • Significantly less competition from other sellers in the building, since typically no advertising is allowed on the MLS and fewer units are generally for sale before a building is complete.

Assignee Pros

  • The ability to purchase a brand new, never lived in unit, if you were not able to buy at the time when the project first launched. This also comes without years of waiting.
  • The chance to buy at a great price if the seller really needs to sell (some assignments happen because the original purchaser cannot close and needs to assign the contract so that they do not lose the deposit they already paid to the builder).
  • A mortgage does not need to be arranged until the registration date, which can provide a buyer with needed time to make mortgage arrangements.
  • Complete transfer of the Tarion New Home Warranty program into the assignee’s name so that they are protected from any unit deficiencies.
  • As mentioned above, condo assignments can be complex, and may not be right for everyone, however there have been many happy cases of assignors and assignees who have greatly benefited from an assignment sale.
  • Contact Benchmark Signature Realty for more information on the process and to find out whether it could be a good fit for you.
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