An assignment sale is when the original buyer of a pre-construction home (the assignor) transfers their Agreement of Purchase and Sale to a new buyer (the assignee) before the property closes. The assignee repays the assignor’s deposit plus any profit, then completes the purchase with the builder at the original contract price.
Key takeaways
- You’re buying a contract, not a finished property. Title transfers from the builder straight to the assignee on closing.
- Most builders must approve the assignment, and many charge a fee.
- The assignee typically pays the assignor the deposit refund plus the profit when the assignment is signed.
- Since 2022, GST/HST generally applies to the profit portion of assignments of new homes, and short holds can be taxed as business income.
Who is involved in an assignment?
- Assignor: the original buyer who signed with the builder and is now selling the contract.
- Assignee: the new buyer who steps into the assignor’s shoes and closes with the builder.
- Builder (vendor): usually has to consent in writing and may charge an assignment fee.
- Lawyers and realtors: each side should have a real estate lawyer. Realtors are optional but common.
How does the money flow in an assignment?
There are usually two payments. When the assignment agreement is signed, the assignee pays the assignor a refund of the deposits the assignor already paid the builder, plus the assignor’s profit. Then, on final closing, the assignee pays the builder the remaining balance of the original purchase price, usually with a mortgage.
| Item | Example |
|---|---|
| Original price agreed with the builder | $648,000 |
| Deposits already paid by the assignor | $129,600 |
| Assignment price agreed with the new buyer | $719,900 |
| Assignor’s gross profit | $71,900 |
| Assignee pays the assignor at signing | $201,500 (deposit + profit) |
| Assignee pays the builder at closing | $518,400 (balance of original price) |
These numbers are before builder fees, commissions, legal fees and tax. You can run your own with our assignment profit estimator.
Why do people sell assignments?
Pre-construction closings can be several years away. In that time, buyers’ situations change: a job moves, a family grows, mortgage rates rise or the buyer can no longer qualify for the full mortgage. Others bought as investors and want to lock in their gain before closing. An assignment lets them exit the contract without defaulting on it.
Why do people buy assignments?
Buyers get access to new construction without waiting years for a new launch, often in buildings that have sold out. Units may come with upgrades already selected, and closing is closer than a fresh pre-construction purchase. The trade-off is that you pay the assignor’s profit, need cash up front for the deposit refund, and take on the builder’s timeline.
Is an assignment sale legal in Canada?
Yes. Assignments are a normal, legal way to transfer a purchase contract, as long as the original agreement allows it. Many builder agreements restrict or prohibit assignments, limit when they can happen, or ban public advertising of the unit. The assignment clause in the Agreement of Purchase and Sale always controls, so read it first. See Can a builder refuse an assignment?
What paperwork is involved?
In Ontario, realtors commonly use OREA Form 150 (Assignment of Agreement of Purchase and Sale), and lawyers prepare or review the final assignment agreement and the builder’s consent. The assignee should get the full original agreement, all amendments, the deposit receipts and the builder’s assignment terms before committing.
Frequently asked questions
What’s the difference between an assignor and an assignee?
The assignor is the original buyer selling the contract. The assignee is the new buyer who takes over the contract and closes with the builder.
Do I get the deposit back when I sell an assignment?
Usually yes. The assignee typically reimburses the deposits you paid the builder, plus your profit, when the assignment agreement is signed.
Does the new buyer pay the original price or the assignment price?
Both, in parts. The assignee pays the assignor the deposit refund plus profit, then pays the builder the balance of the original price on closing.
Is an assignment the same as a resale?
No. In a resale the seller owns the property and transfers title. In an assignment the seller only owns a contract to buy; title goes from the builder directly to the assignee.
Buying or selling an assignment?
Browse live assignments or post yours for free on Assignment Connect.
Sources
- CRA: Assignment of a purchase and sale agreement for a new house or condominium unit (GST/HST Info Sheet GI-120)
- CRA: Residential property flipping rule
- OREA Form 150: Assignment of Agreement of Purchase and Sale
This guide is general information, not legal, tax or financial advice. Rules change and every agreement is different, so speak with a real estate lawyer, accountant or mortgage professional about your situation.