TRENDING: Altus Group In “Strategic Review” That Could Result In Sale

Assignment Sale

Explore how assignment sales work in Canadian real estate, especially in pre-construction deals, and what buyers and sellers should watch for.

Assignment Sale
Escrow – Definition, Meaning, and Examples in Canadian Real Estate

May 22, 2025


What is an Assignment Sale?

An assignment sale occurs when the original buyer of a property (the assignor) sells their rights in the purchase agreement to a new buyer (the assignee) before the deal closes.

Why Assignment Sales Matter in Real Estate

Assignment sales are common in Canadian pre-construction real estate, especially in hot urban condo markets. The assignor sells the contract – not the property itself – before the original closing date.

Reasons for assignment sales include:

  • The assignor can no longer complete the purchase
  • The property's value has appreciated
  • The buyer is seeking a profit before possession

Assignment sales require developer consent and often involve assignment fees, legal reviews, and specific contract clauses.

Risks and considerations include:

  • Tax implications (capital gains or HST)
  • The new buyer assumes all obligations
  • Lender approval must be re-obtained

Understanding assignment sales empowers buyers and sellers to navigate pre-construction contracts and take advantage of changing circumstances.

Example of Assignment Sale

An investor assigns their agreement for a pre-construction condo in Toronto, selling the contract to a new buyer for $50,000 more than they originally paid.

Key Takeaways

  • Transfers a purchase agreement to another buyer.
  • Common in pre-construction transactions.
  • Requires builder approval and legal review.
  • Can involve tax and financing implications.
  • Must be documented clearly in writing.

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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