What is an assignment?
An assignment is the sale of a contract of purchase and sale to a third party. The most common kind is a condo assignment. A purchaser buys a condo that isn’t going to get built for 5 years from a developer. The purchaser has a change in their situation and they want to sell their unit. Since the building isn’t complete there is no title and you can’t see your unit.
You can only assign the agreement of purchase and sale.
How does it work?
Every assignment is different but they usually have these 3 parties the original purchase, the original purchaser, the new purchaser, and the original vendor (the developer):
Assignor (Original Purchaser): The original purchaser who bought the property from the developer and now wants to sell it.
Assignee (Purchaser of the Assignment): This is the person buying the assignment from the Assignee and will become responsible for closing the purchase.
Vendor (Original Seller): The vendor must approve the assignor and will often require a mortgage approval. In some cases, there is an assignment fee that can be up to $10,000 and a lawyers fee up to $1500.
What makes up the Assignment Agreement of Purchase and Sale?
Most assignments are done using a standard OREA form 145 Assignment Agreement of Purchase and Sale. You can download a sample of the full agreement from connect.ca/assignmentaps.doc
The assignment agreement includes 6 key terms summarized in the standard Schedule B:
There are several standard clauses that will be incorporated by real estate professionals or lawyers but there are three common conditions:
At One Day Assignment, we make this process easy for you by getting by offering you a great assignment offer within a day of reviewing your APS.
The value of pre-construction is typically determined by looking at the current pricing of assignment units trading the building, new construction sale prices of newer resale units in the surrounding area. Typically pre-construction condos closer to completion are more attractive to end-users who are prepared to pay a greater premium over the initial contract.
In order to get out of your pre-construction condo you can assign the unit to another buyer with the consent of the developer. In many cases there are restrictions on how you can market the property, In most cases you are not allowed to list it on MLS. You can sell it quickly to an assignment buy investors like One Day Assignment or you can try and find your own buyer. It is important to make sure that you are within the development guidelines set-out in the Agreement of Purchase and Sale or else you can void the agreement and lose your deposit.
Assigning a condo will typically have the Buyer (assignee) replace the Seller’s (assignor’s) deposit and have it credit to them as part of the deal. Profits may be realized at the time of assignment but most commonly the majority will come at final close.
Since the condo isn’t registered or “complete” you technically don’t own it yet you can’t something you don’t own. So really what you are “selling” is the contract to buy the contract from the developer through a transaction called an assignment.
An assignment is the sale of a contract of purchase and sale to a third party. The most common kind is condo assignment. A purchaser buys a condo that isn’t going to get built for 5 years from a developer.