Understand the contract behind your assignment purchase

What is an assignment purchase?

An assignment purchase involves acquiring the original buyer’s contractual interest in a pre-construction house or condominium before the final property transfer. The original buyer is the assignor, and the new buyer is the assignee. The assignee takes on rights and obligations under the builder’s agreement and completes the purchase with the builder, subject to the terms of the transaction and any required consent. The Canada Revenue Agency’s assignment overview explains this distinction between an assignment and the eventual property purchase.

An assignment requires careful review of both the new agreement and the original builder contract. The assignment price, deposits, builder charges, financing requirements, and anticipated closing dates all affect the buyer’s commitment.

The assignment purchase process

The transaction generally involves the following stages, depending on the agreements and the builder’s requirements:

1. The assignment agreement: The assignor and assignee negotiate an Assignment of Agreement of Purchase and Sale. It should address the purchase price, deposit reimbursement, payment timing, and conditions, including builder approval where required.
2. Requesting builder consent: The assignor’s lawyer contacts the builder’s legal team to request consent and confirm the documents and fees needed for the assignment.
3. The builder’s assignment documents: If the builder agrees to proceed, its documents are reviewed for assignment fees, identification and financing requirements, deadlines, and the obligations of both parties.
4. Signing and fulfilling requirements: Each party reviews and signs the documents with their lawyer, then provides the required information, payments, and supporting documents.
5. The assignment closing: Once the required approvals and conditions are satisfied, the parties complete the assignment and exchange the funds due under their agreement. These may include reimbursement of deposits and an agreed assignment premium or other price adjustment.
6. The final builder closing: The assignee arranges financing, pays the balance and closing adjustments, and takes registered ownership when the builder transaction is ready to close. For a condominium, interim occupancy may occur before title is transferred. The Condominium Authority of Ontario explains this stage.

How we can help

Our office assists with:

• Reviewing both agreements: Examining the assignment agreement and original builder Agreement of Purchase and Sale for obligations, levies, closing adjustments, restrictions, and other concerns.
• Builder requirements: Coordinating with the builder’s legal team and the assignor’s lawyer on consent, assignment fees, supporting documents, and outstanding conditions.
• Closing arrangements: Explaining when funds are due and assisting with the assignment closing and the later purchase closing with the builder.

Who may need an assignment purchase?

• Homebuyers considering a new home or condominium through an existing pre-construction contract. The project’s remaining construction and closing timeline still needs to be assessed.
• Real estate investors evaluating a contract offered by an original purchaser whose plans or circumstances have changed, with attention to the price, financing, and obligations being assumed.