Whether you are buying or selling a pre-construction property, our team will ensure your transaction is legally sound and designed to protect your interests.
An assignment sale is the sale of a contract to purchase a pre-construction property. Instead of selling an existing home or condo, the original buyer of a property which is still under construction (the assignor) want to transfers his rights and obligations under the original contract to a new buyer (the assignee).
In an Assignment the assignee (new buyer) assumes all the assignor’s (Original Buyers) duties and obligations, including interim occupancy costs and other responsibilities, until the property’s completion when the title transfers to the assignee (the new buyer).
1. Review of Your Contract
We carefully check the contract to make sure it’s still valid and that there are no legal issues from the developer or builder that could affect the New Buyer while safe guarding the Original Buyers interests.
There are 2 standard forms used by Real Estate Agents in Assignment sales.
Most developers also have their own specific forms. At Simply Legal, we ensure the proper documentation is used and that all forms are legally compliant.
2. Confirming the Original Buyer’s Right to Assign
After a detailed review, and if the circumstances permit, we should be able to confirm the original buyer has the right to assign the property to someone else. This means the original buyer can transfer their ownership following the builder or developer’s instructions.
3. Clearly Outlining Your Costs
We outline any fees that the builder or developer might charge for allowing the assignment. This includes permission fees required to allow the assignment and legal costs associated with the buyer and the seller.
4. Explaining New Buyer Requirements
We explain the terms and conditions the new buyer must follow in order to complete the assignment. This ensures everyone is clear on what’s needed and who is responsible for the associated expenses.
Real estate assignment sales are complex, with numerous legal considerations. Both the assignor and assignee should retain lawyers with expertise in real estate assignments. Simply Legal provides comprehensive legal services for both parties.
For sellers who wish to assign their contract to purchase a property, several options exist. Sellers can choose to assign their agreement to a new buyer, often as a way to recoup some of their initial investment. However, it’s essential to consider the following:
Liabilities: If the selling price is lower than the original purchase price from the builder, the seller will face financial loss. Additionally, sellers should be aware of any outstanding deposits held in trust with the builder and how those deposits will be handled during the assignment process.
Closing Costs: Sellers may be responsible for covering any closing costs that arise from the transaction, which could further impact their finances.
Buyers looking to purchase an assigned property may find several advantages in the current market:
Lower Purchase Prices: Many assignments are available at prices significantly lower than the original purchase price. This provides buyers with an opportunity to enter the market at a reduced cost.
Incentives and Negotiation: Buyers may have greater negotiating power in a slow market, allowing them to request favourable terms or additional incentives from the seller.
When closing on a property, sellers might need to bring extra funds if the selling price is lower than expected. Understanding these financial details is important.
→ Sellers should think carefully about the benefits of assigning their property and any potential losses they might face.
→ Buyers should conduct thorough research to understand the overall value of the assignment and any risks involved. This way, everyone can make informed decisions during the buying or selling process.
Simply Legal can help you find the best solutions. Don’t let declining values catch you off guard—get the legal support you need today!
Q. Can a seller list an assignment on the MLS or REALTOR.ca?
A. Typically, assignment sales cannot be listed on MLS or REALTOR.ca due to restrictions by many real estate boards. Some boards may allow internal REALTOR®-only listings. Always check your assignment clause and builder’s consent rules before marketing. Simply Legal can help you navigate assignment sale regulations and protect your legal rights.
Q. What happens if the closing of an assignment is delayed?
A. If the closing of an assignment sale is delayed, the consequences will depend on the terms of the Agreement of Purchase and Sale. Delays can result in penalties, interest charges, or even the termination of the deal if time is considered “of the essence.” In the case of pre-construction assignments, delays may also affect the original purchaser’s obligations with the builder. It’s essential to communicate with all parties involved and seek legal advice promptly to understand your options and minimize risk. Simply Legal can assist you in negotiating extensions and protecting your legal interests during closing delays.
Q. What if the closing is delayed because of the assignee?
A. If the assignee causes the delay—whether by failing to secure financing, not being ready to close, or breaching other obligations—the assignor may face serious consequences, including default under the original builder agreement. In such cases, the assignor could be held liable for damages, including potential forfeiture of deposits or legal action. It’s essential that both parties understand their rights and responsibilities, and that proper legal protections are built into the assignment agreement. Simply Legal can assist in drafting and reviewing assignment agreements to minimize risk in these situations.
Q. What are the costs associated with assigning a purchase agreement?
A. Assignment sales can come with extra fees, like developer administration fees and legal fees. At Simply Legal, we can help you with everything at reasonable costs, ensuring everything is done right. We’ll review your purchase agreement and work with the developer to explain all the fees involved. Our lawyers make sure any costs are handled fairly and according to the contract.
Q. When does the Assignor get paid?
A. The original seller (assignor) typically gets paid when:
After this, the lawyers for both sides handle the payment. At Simply Legal, we work with everyone to clearly outline when payments will happen, so both parties know when the money will be transferred.
Disclaimer: The content on this website is for general information only and does not constitute legal advice. For specific legal issues, contact Simply Legal or your own counsel. Simply Legal makes no guarantees about the accuracy, completeness, or reliability of the information provided. Content is current as of its publication date and may not reflect recent changes.
