Assignment Clause

Discover what an assignment clause is in Canadian real estate, how it works in pre-construction deals, and what to consider before assigning your agreement.

Assignment Clause

May 22, 2025


What is an Assignment Clause?

An assignment clause is a provision in a real estate agreement that allows the buyer to transfer their contractual rights and obligations to another party before closing.

Why Assignment Clauses Matter in Real Estate

In Canada, assignment clauses are particularly relevant in pre-construction or off-plan real estate deals. They provide flexibility by allowing the original buyer (the assignor) to 'assign' or sell their purchase agreement to a new buyer (the assignee) prior to taking possession.

Key details typically outlined in the clause include:
  • Whether assignment is permitted
  • Conditions for assignment (e.g., with or without the seller’s consent)
  • Any associated fees (builder or developer fees can range from $1,000 to $5,000 or more)
Assignment clauses are valuable tools in fluctuating markets. Buyers may use them to profit from rising property values or to exit a deal if circumstances change. However, not all developers or sellers allow assignments, and some impose strict restrictions.
Understanding the assignment clause helps prevent legal issues and financial losses, especially in fast-paced urban condo markets where assignments are common. Legal advice is recommended before entering or assigning such agreements.

Example of an Assignment Clause in Action

A buyer of a pre-construction Toronto condo assigns their contract to another purchaser after the unit appreciates by $50,000. The assignment clause in their agreement permits this with a $2,500 developer fee.

Key Takeaways

  • Allows a buyer to transfer their purchase agreement.
  • Common in pre-construction real estate.
  • May require developer approval and fees.
  • Useful in changing market or personal situations.
  • Must be reviewed carefully with legal guidance.

Related Terms

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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