Assignments

Overview & Core Definition

An assignment sale occurs when the seller (the assignor) sells their rights to a original purchase contract—agreed upon with a builder—to a new buyer (the assignee).
Key Rule: The assignor is selling the contract itself, not the physical property. This applies to both freehold properties and condominiums.

Important Disclaimer Requirement

When advising clients on assignment sales, agents must advise them to consult with a real estate lawyer and/or an accountant prior to finalizing any agreement, as assignment sales involve complex legal and tax considerations.

Builder Rules & Restrictions

The assignor must have explicit permission from the builder to assign the contract. All Agreement of Purchase and Sale (APS) documents for assignments must include a condition requiring builder approval.
Builder policies vary significantly and may include the following restrictions:
  • Advertising & MLS Restrictions: Many builders allow assignments but prohibit public advertising or listing the unit on the MLS, converting the transaction into an exclusive listing.
  • Timeframe Constraints: Many builders block assignments within 30 to 60 days of the projected unit transfer/occupancy date because builder lawyers do not want to alter transfer paperwork once initialized. Others only allow assignments during specific pre-occupancy windows.
  • Sales Thresholds: Builders may require that a certain percentage of the overall project (e.g., 90% of all units) or all units of that specific model in the building be sold before allowing any assignments.
  • Assignment Fees: Builders almost always charge an assignment fee. While typically around $1,000 to $2,000, fees can reach $5,000 or higher.
  • Profit-Sharing Clauses: Some builder contracts state that any profit generated from an assignment sale must go directly to the builder.

Best Practices & Pitfalls for Real Estate Agents

  1. Read the Contract & Amendments Thoroughly: Never rely solely on verbal confirmations or phone calls to a builder’s sales center/office. Sales associates may not be fully informed about specific contractual clauses.
  2. Review Individual Unit Amendments: Even within the same building, terms can differ. Savvy buyers often negotiate custom amendments permitting assignment rights, whereas neighbouring unit contracts may explicitly forbid them.
  3. Request All Documentation from Sellers: Always demand the original builder contract along with all subsequent amendments. Amendments made weeks after the initial signing can materially alter assignment rights and transaction conditions.