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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

Rent Control

Rent control refers to government regulations that limit how much landlords can increase rent for residential tenants each year.. more

Receivership

Receivership is a legal process where a court or secured creditor appoints a receiver to take control of a borrower’s assets, such as property or. more

REALTOR

A REALTOR is a licensed real estate professional who is a member of the Canadian Real Estate Association (CREA) and adheres to its Code of Ethics and. more

Property Use History

Property use history refers to the documented past uses, functions, and occupancy of a property, which may affect environmental risk, zoning, or. more

Property Management

Property management is the oversight and administration of real estate assets on behalf of the owner, covering leasing, maintenance, financial. more

Property Maintenance

Property maintenance refers to the ongoing upkeep, repair, and management of a building or land to preserve its safety, functionality, and appearance.. more

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