Clear advice when selling your pre-construction contract

What is an assignment sale?

An assignment sale transfers the original purchaser’s contractual interest in a pre-construction home or condominium to a new buyer before the final property transfer. The original purchaser is the assignor, and the incoming buyer is the assignee. The assignee takes on the purchase under the agreed terms, with builder consent where required. The Canada Revenue Agency’s assignment overview describes how this arrangement relates to the original builder agreement.

The assignment agreement sets out the amount and timing of any deposit reimbursement, assignment premium, or other price adjustment. The sale may produce a gain or a loss. The builder’s documents also need to be reviewed to determine whether the original purchaser is released or retains obligations if the assignee fails to complete the purchase.

The assignment sale process

The transaction generally involves the following stages:

1. The initial agreement: The assignor and assignee negotiate an Assignment of Agreement of Purchase and Sale, addressing the price, deposits, payment schedule, and conditions, including required builder approval.
2. Requesting builder consent: The seller’s lawyer reviews the original contract and contacts the builder’s legal team to request consent and confirm the applicable restrictions, fees, and deadlines.
3. Reviewing the builder’s assignment documents: These documents set out the builder’s requirements and should be checked for any continuing obligations or release of the original purchaser.
4. Signing and fulfilling requirements: The parties sign the documents with legal guidance and arrange the identification, financing information, fees, and other items required by the builder.
5. The assignment closing: Once the required approvals and conditions are satisfied, the assignment is completed and funds are transferred according to the agreed payment terms. Some amounts may be payable at a later stage if the agreement provides for this.
6. The final builder closing: The assignee completes the purchase with the builder when the property transaction is ready to close. We explain the seller’s position under the documents, including any exposure if that closing does not occur.

How we can help

Our office assists with:

• Builder agreement review: Identifying assignment rights, marketing restrictions, consent requirements, and builder charges in the original Agreement of Purchase and Sale.
• Builder coordination: Working with the builder’s legal team and the assignee’s lawyer to address approval requirements and prepare the necessary documents.
• Payment terms and liability: Reviewing or drafting provisions for deposit reimbursement, the agreed sale price, payment timing, and the seller’s obligations after assignment.
• Closing management: Preparing closing documents, coordinating the transfer of funds, and explaining any outstanding steps or commitments.

Who may need an assignment sale?

• Pre-construction buyers whose financial, personal, or family circumstances have changed, including relocation, separation, or changes in borrowing costs.
• Investors considering a sale of their contractual interest before the builder’s final closing, after assessing the proposed price, transaction costs, and any continuing obligations.