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What is a Condo Assignment Sale? — Everything You Need to Know

Assignment sales are a unique transaction in the real estate space that requires additional work than your typical resale deal. It’s more technical in a way where you’re essentially purchasing a contract from someone else. Our team is here to make sure you fully understand what an assignment entitles and can go over all the ins and outs. For technical terms, the original purchaser who is looking to sell their unit before closing is referred to as the “Assignor” and the new purchaser who is taking over the contract is referred to as the “Assignee”

What is a Condo Assignment Sale?

To put it in simple terms, an assignment sale isn’t exactly the sale of the condo itself, but the assignment of the contract. We usually see assignments on pre-construction condos and homes. There are certain benefits and risks to buying assignment sales, and we are going to look at both sides in depth.

When Does It Occur

Condo assignment sales occur before the final occupancy or closing date of a new construction property. An assignment sale occurs before the final closing of the property between the original purchaser (Assignor) and the builder.

As a new purchaser of an agreement, you are going to assume everything that the original purchaser agreed to in their original contract. For this reason, it is important to appoint a lawyer by your side to go over two important set of agreements. The first one is the agreement between the original purchaser and the builder. Lawyer will walk you over red flags or things like closing costs associated to the unit – remember you have to assume these terms. The second piece of agreement the lawyer will look at is the new agreement between the original purchaser (Assignor) and the new purchaser (Assignee)

Reason for a Condo Assignment Sale

Assignment sales take place with all sort of new construction product such as townhomes, detached homes, condos, stacked townhomes & more. Why do these kinds of sales happen? The most common reason is the original buyer’s circumstances might change and present a reason to list their condo for assignment sale transactions.

There are many reasons why one would decide to sell their unit on assignment since the gap of purchase time to occupancy is wide and can take 2-7 years depending on what type of property it is. Perhaps they will welcome a new member of their family soon and the condo just isn’t big enough for everyone. Whatever the reason, it isn’t always negative. It is important to work with professionals that can guide you throughout the process of an assignment sale.

Costs of Condo Assignment Sales

Is selling an assignment better than a regular real estate transaction? Yes. Being the seller (assignor) is known to contain more tax fees than a unit that is already built and you’ve taken title of. As a buyer of an assignment, you do not need to observe such fees and a professional can walk you over your closing costs associated to the transaction.

Now that you know what is a condo assignment sale, you can therefore make an informed decision. We get a lot of questions about new condos and whether it’s better to wait or to list them for assignments right away.

An assignment is better if you’re looking to get your money back sooner rather than later. Assignments will also see that the assignee pays the land transfer taxes and other taxes. Sometimes you can even make a profit on the market value if condo assignments are listed during a real estate boom.

It all sounds great, but selling condo assignments also has its drawbacks. For example, experienced real estate agents know it’s more difficult to sell an assignment property due to a much smaller buyer pool. Most assignment sales cannot be advertised online on platforms such as MLS.

In most cases,, there are marketing limitations when it comes to selling an assignment which can hurt your chances of finding a potential buyer

If you are looking for a new home sooner rather than later, an assignment sale offers closer occupancy dates, unlike purchasing something new that will only be ready in 5 years. In some cases, you may still have a chance to choose your own colours and finishes of the unit

Pros and Cons of Condo Assignment Sales for Buyers

As a buyers, you can expect to see advantages such as more options when choices are low. Since assignments are more complex, you typically face less competition on deals whereas in a hot market you may be in a bidding war scenario.

Pros and Cons of Condo Assignment Sales for Sellers

The pros for assignment sellers are a shorter list compared to the ones for buyers. First of all, sellers can get their money faster and put that amount to good use such as reinvestment. Sellers will not be responsible for carrying costs such as occupancy fees or go ahead with the mortgage payments or other closing fees.

At times, the seller can also play the market and list the unit for higher than the original purchase price and make a profit. However, more often than not, sellers will have a harder time seeing offers due to marketing restrictions and a smaller buyer pool.

Since the process for assignments is also much more intricate, it will be difficult to find a real estate professional out there that is familiar with this type of sale. For this reason, an assignment transaction can come with more complexity and would require additional knowledge.

Conclusion

Now that you know what is a condo assignment sale, you can decide if it’s the route you want to take as a buyer or seller. There are more advantages from a buyer’s standpoint, but there are undeniable pros for sellers such as getting your money back faster and avoiding closing costs.

Looking for assignment sales? Here are some top options on the market:

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About the Author
Tal Shelef

Tal Shelef is a know it all when it comes to pre-construction developments Canada Wide. His years of daily research and growing up on construction sites / seeing development sites grow from the ground up at an early age gave him a passion like no other. He uses his knowledge to educate Condowizard’s clients. Have a conversation with Tal and see how much value one phone call may provide you.

What is a Condo Assignment Sale? — Everything You Need to Know