Condo Assignment Process

A condo assignment sale usually occurs when the building is not yet completed. It happens when the seller wants to sell the condo before completion. It’s an assignment because they don’t yet own the condo and therefore, assigning the legal right to the contract to someone else. Almost like a car lease takeover! 

Let’s take a look at this process in more detail.

The Process

How do you get started? Since you are more accurately selling the purchase agreement than the condo itself, you need to first clarify the terms of said contract. You may have to pay an assignment fee, but this depends on the contract agreed on with the builder (you would need to check the contract for that).

You need to get started before the interim occupancy [1] ends. The interim occupancy term can range from 1 month to 6 months and in bad cases (Rare) even up to 2 years. When you have a new buyer, they would take on all the fees from the acceptance date until the closing. 

One thing to keep in mind is that you will get all the money during closing and not during the occupancy term. Once you have learned all these finer details and clarified the terms of your contract, you can then list your unit.

Depending on the details of your contract, you can either list it privately or go through a real estate professional. They would have more experience and expertise in assignments as well.

During occupancy, you have the chance to go in with your real estate agent and stage the area. There are also experienced stagers you can hire for this and it will really help boost the sale potential, but all for a price. This means that even though you’ve occupied the unit, you do not actually close on the mortgage. This means you can actually sell the rights to your unit even if you get the keys which will avoid you the closing costs. 

There are many people who forget that the profits made are taxable. You must understand what you are liable to pay, and an expert would make sure you won’t miss out on a payment. We always advise our clients to speak with a professional accountant regarding this topic.

architecture blueprint

Why Sell on Assignment?

For some people, it might make sense to sell their condo on assignment as a sort of investment strategy. Another reason some people may find it necessary to sell on consignment would be a sudden change in your life. 

Perhaps a one-bedroom was okay a year ago but you have since then added a new member to your family. Financial issues that crop up could be another reason people decide to go for an assignment sale.

It’s very important to read over your contract thoroughly and make sure that the condo assignment is a process that is permitted by the builder.

Marketing Restrictions

It’s important to not infringe on any of the rules laid out in your contract, so you must carefully examine each clause. There are marketing restrictions during the assignment process that you must follow, or it could result in the termination of your agreement and the loss of your deposit.

Usually, there would be almost no marketing allowed. You wouldn’t be allowed to post it online or to the MLS. This does make it infinitely harder to sell, which can be a huge setback, especially if you are trying to get rid of the condo quickly.

While it may be tempting to skirt the lines, we advise you not to test the marketing restrictions outlined in your contract. If you breach the terms of the agreement, that could lead to the before-mentioned consequences. 

With this in mind, you could be wondering how you will ever get the condo off your hands. Our top suggestion would be to consult a professional. A real estate agent (preferably one that specializes in condo assignments) will have ways to give you exposure. We’re here to help. 

The Realtors that focus on assignments have a database of potential buyers and with word of mouth and the network they have under their belts, your condo could sell in no time at all.

The Fees

The cost of anything is a huge consideration. There are obviously some fees involved in the assignment process. The fees (if condo assignment is allowed), will be listed somewhere in your contract. It would be a good time to dig it out and familiarize yourself with the terms.

Aside from everything on the builder and condo’s end, you will also have to pay fees on the agent’s side. You will be exempt from this if you coincidentally have a buyer already or found one due to your own merits. In regards to Realtor fees on an assignment sale, you’d be paying around the same commission as if you listed a home.

If you have gone with a professional, there will be commissions and perhaps even legal fees involved. If you have searched for a certified accountant, then there are fees there as well. An assignment process strays from the norm and can be more complicated than plain resales, and this is why the fees are more likely higher.

two men having a conversation

Renegotiation of the Contract

For potential new assignment condo buyers, renegotiation of the previous agreement deal between the first buyer and the builder is near-impossible. Make sure potential buyers understand that to purchase your condo, they are agreeing to all the previously stated terms. They are agreeing to the good and the bad.

To protect the interest of both sides, we suggest legal counsel during this time so there are no misunderstandings. However, the purchase price, etc. and other specifics of the actual purchase can be negotiated. Once you finalize on a deal, we always include 5-day lawyer review in the offer this way you can get full legal advice.

Advantages of Condo Assignment

You can get the condo off your hands and move on more quickly

Maximize return

No land transfer taxes

Avoid HST

Get your partial or even full profits back upfront 

Avoid closing costs and occupancy fees

Risks of Condo Assignment

You could face certain marketing restrictions

There is a larger risk of selling at a lower price than resale. 

It’s a more complicated process than reselling a home/condo that is move-in ready which you can tangibly feel, touch and see. With assignments, you’re assuming the floor plan and finishes listed in the original APS.

building in construction with flocks of birds above

Conclusion

Condo assignment is a more complicated process than resales. It’s important to keep this in mind while you search for the help of professionals. Remember to review the terms of your contract in detail and follow the correct steps in the condo assignment process.

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