Whats a Condo Assignment ?
The number of condo Assignment transactions is growing rapidly in Toronto. For sellers who bought a pre-construction new condo from floor plans several years earlier and whose plans have changed, this is an opportunity to sell before they have to get a mortgage and incur additional closing costs such as Land Transfer Tax, lawyers fee, Development charges & levies, Tarion New Warrant etc. For buyers who want a brand new condo without having to wait years for construction to finish, or who can not find what they want in the resale market, it represents a lot more choice. Most Assignments are sold on an ‘Exclusive’ basis. They are also more complicated than a regular sale because a mortgage can not be obtained on the closing of the Assignment, and will need to be postponed until the day of registration. Other issues such as occupancy, reimbursement of the seller’s deposits and more must be taken into account.
An Assignment means that you are buying a ‘right’ to own a condo that is not in the Land Registry System. Usually the condo has not been built or it is not ready for occupancy and the building has not been registered. This ‘right’ is just a paper transaction and not the transfer of the actual property. The closing of the Assignment occurs BEFORE the condo is registered. The individual who buys the ‘right’ will eventually close and register their ownership of the condo at some later date.
It’s important to note that some builders won’t allow their original purchasers to assign contracts, or will only do so for a fee (we’ve seen assignment fees from $500 to $6,000). Builder approval to assign a contract is almost always necessary.
If you’re considering an assignment, make sure you work with a REALTOR who understands the legal, final obligations and intricacies of assignments and can guide you through the process. As always, we’d be happy to help if you have any questions regarding assignment of contract.