An assignment occurs where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer’s rights and obligations of the Agreement of Purchase and Sale before the original buyer closes on the property (that is, when the condominium corporation is formed or when a freehold property is occupied).
Why is the Buyer Assigning?
There are many factors that lead to a buyer wanting to assign their purchased unit. Their situation may have changed from a few years ago when they originally purchased, perhaps started a family and now need a bigger space or changed jobs and will need to move to a different area. Another reason is that the original purchasers may have over extended themselves and will be unable to close on the property. This provides a great opportunity to negotiate as the motivation to sell is incredibly high. Also common are investors looking to realize profit without paying any closing costs on their transaction that assign their units prior to occupancy.
What’s Great About Assignments?
An assignment provides the opportunity to purchase into a great development that was originally sold out and allows you the benefits of a never before lived in property without waiting years for it to be completed. Some assignments are actually partially (or even fully) completed and you are able to go in and actually see the property you will be purchasing. This is a great benefit the original purchaser wouldn’t have had and allows you to see the features, finishes, views and quality of construction. In addition, assignments provide an opportunity to get into a development at a lower price than when the project is fully constructed and occupied.
What To Be Cautious Of:
Assignments can easily become complicated transactions. Keep in mind you will need to “pay back” the original buyer’s deposits to them, plus profit they’ve realized since they purchased. You will also be responsible for all the closing costs associated with this transaction. This can include developer charges, utility hook-up fees, land transfer tax, HST if applicable and lawyer fees.
You want an educated and experienced professional on your side that has completed many assignment transactions to guide you through this complex but rewarding path to ownership.
Contact us today to delve further into if an assignment could be right for you.