The basics

When you buy a pre-construction home, you sign an Agreement of Purchase and Sale (APS) with the builder and pay deposits over time. Closing can be years away. An assignment lets you transfer your rights and obligations under that APS to someone else before closing.

• Assignor: the original buyer who is selling the contract.
• Assignee: the new buyer who takes over the contract and closes with the builder.
• Builder consent: most agreements require the builder’s written approval before an assignment can happen.
• Assignment fee: many builders charge a fee (flat or a percentage) to process the transfer.
• Occupancy vs. final closing: condos often have an interim occupancy period before final closing. Know which date applies.

Every builder contract is different. Before you list or make an offer, have a real estate lawyer review the original APS and any amendments.

Where the money goes

In most assignments, the assignee pays the assignor two things: a refund of the deposit the assignor already paid the builder, plus the profit (the difference between the assignment price and the original price). At closing, the assignee pays the builder the remaining balance of the original price.

Try your own numbers with the assignment profit estimator on our homepage.

Buying an assignment: your checklist

• Get a copy of the original APS, all amendments and the builder’s assignment clause.
• Confirm the deposit already paid and whether any deposits are still due.
• Check the occupancy and final closing dates, and whether the builder can extend them.
• Confirm who pays the builder’s assignment fee and any closing adjustments (development charges, utility hookups, etc.).
• Line up financing early. Lenders will usually base your mortgage on the value at closing, not today’s price.
• Make your offer conditional on builder consent and a lawyer’s review.

Selling your assignment: your checklist

• Read your APS for an assignment clause. Some builders prohibit assignments before a certain date or sales stage.
• Ask the builder about fees, required paperwork and any limits on advertising the unit publicly.
• Price with the full picture: what similar units resell for, what the buyer must pay at closing and what fees you’ll cover.
• Share key facts upfront: original price, deposit paid, closing date, parking, locker and upgrades. It filters out tire-kickers.
• Use a lawyer to draft or review the assignment agreement and coordinate with the builder.

Tax & HST on assignments

Assignment profits are often taxed differently from a typical home sale. In Canada, profit from assigning a contract you intended to flip is generally treated as business income, and the federal residential property flipping rule can apply to properties (including rights to buy them) held for less than 365 days.

Since May 2022, assignment sales of newly built residential property are also generally subject to GST/HST on the portion of the price above the deposit. How this works for your deal depends on the details.

This is general information, not tax or legal advice. Talk to an accountant and a real estate lawyer before you buy or sell an assignment.

Using Assignment Connect