Knowledge centre
An assignment competes with resale condos, remaining builder inventory and other assignors, but often has tighter marketing rules, more complicated financing and less certainty about final costs. When current values sit below the original contract price, an assignor may need to accept a loss and may still remain exposed until final closing.
Builder consent fees are only one line. Add legal fees, Realtor commission, GST/HST, income tax, deposit financing cost, upgrades, carrying costs, possible occupancy fees, closing adjustments and the price discount needed to attract an assignee. Calculate the net result and the fallback closing result side by side.
An assignment can trigger GST/HST and income-tax consequences, and it can change how a new-housing rebate is handled. The taxable amount, timing and whether profit is business income or another category depend on the facts. Get a written tax estimate before setting the price or spending the apparent profit.
The lender may calculate the mortgage from the lower supported value, leaving the assignee to bring more cash. The assignor may then face a price reduction, a failed assignment or continuing liability. Solve the valuation problem before removing financing conditions, not days before the builder closes.
The assignee must qualify with a lender willing to finance the final builder closing and understand the assignment structure. The lender may review the original purchase price, assignment consideration, deposits, builder documents, current appraised value and the source of every dollar. A pre-approval before locating the unit is not final approval.
Not necessarily. An assignment can transfer contractual rights and obligations without fully releasing the original purchaser. If the assignee fails, the builder may still have rights against the assignor depending on the agreement, consent and release. Ask your lawyer for the answer in writing before treating the deal as finished.
Do not assume the assignor receives the deposit and profit as soon as the assignment is signed. The agreement between assignor and assignee must state what is paid, when it is paid, who holds it and what happens if builder consent or final closing fails. The cash-flow structure can decide whether the assignment is workable.
Because you are transferring a contract before you own the property. The builder’s agreement may control consent, timing, documents, marketing, administration charges and the assignee’s approval. Advertising first and asking later can put the assignor in breach.
An assignment clause is permission to ask for a transfer, not a guaranteed exit. Before signing, have a real-estate lawyer confirm whether assignment is allowed, when it can happen, whether the builder can refuse consent, what it costs, how it may be advertised and whether you remain liable after the transfer.
Price the purchase and renovation as one decision. Verify permits, zoning, contractor scope, contingency, temporary housing, appraisal and how renovation funds will be advanced. A low purchase price does not help if the work cannot be approved, insured or financed.