You’ve probably heard the word “assignment” thrown around at an open house or in a real estate conversation, usually followed by a slightly blank look from everyone in the room. That’s not a coincidence.
Assignment sales are genuinely one of the most misunderstood transactions in Ontario real estate and getting them wrong has real financial and legal consequences.
What Is An Assignment Sale Actually?
When someone buys a pre-construction property – either a condo or a new build – they sign an Agreement of Purchase and Sale (APS) with the builder. But the building might not be ready for two, three, sometimes four or more years. Life happens. Circumstances change. People need out.
An assignment sale is how they get out before the building is finished and before they ever take ownership.
Instead of backing out and potentially losing their deposit, the original buyer (called the assignor) transfers their position in the contract to a new buyer (called the assignee). The assignee steps into their shoes, takes over the contract, and eventually closes with the builder.
Think of it this way: The assignor isn’t selling a property. They’re selling their right to buy a property.
Why Would Someone Want To Buy An Assignment?
Good question. A few reasons:
- The unit may be priced below current market value as the original buyer locked in years ago when prices were lower
- The assignee can still choose their own finishes (if the builder hasn’t finalized them)
- It’s an opportunity to purchase in a building that’s already sold out
But it’s not without complexity, which is exactly why you need to understand what you’re getting into.
The Builder Has A Say And A Big One
Here’s what catches most people off guard. You can’t just decide to assign a contract and post it on MLS. The original APS almost always requires the builder’s written consent, and that consent can be withheld, sometimes without reason.
Builders may also:
- Charge an assignment fee (which can be significant, and is spelled out in the original APS)
- Restrict who the assignor can assign to
- Have rules about how and where the assignment can be advertised
- Limit or prohibit MLS listings of the assignment
This is why reading the original APS carefully, with a lawyer, is non-negotiable before any assignment conversation starts.
What Does The Assignee Actually Pay?
This is where it gets layered. The assignee isn’t just picking up the original purchase price. Here’s what the numbers typically look like:
Assignment cost: Paid to the assignor. This usually includes the original deposit they paid to the builder, plus any profit (the difference between what they paid and what it’s worth now). This amount may be subject to HST.
Original purchase price: Still owed to the builder on final closing.
Adjustments: The assignee reimburses the assignor for deposits already paid to the builder.
Builder fees: Who pays the assignment fee to the builder is negotiable between assignor and assignee.
One more thing worth knowing is that incentives the original buyer received like upgrades, capped fees or other discounts may not transfer to the new buyer. Don’t assume they do.
What Is Occupancy And Why Does It Matter?
New builds in Ontario have two closing dates, not one. The first is the occupancy date which is when you can move in, but the building hasn’t been registered yet, so you don’t technically own it. You pay monthly occupancy fees to the builder (essentially rent covering interest on the unpaid balance, estimated property taxes, and maintenance fees) but no mortgage exists at this stage.
The second is final closing which is when the building is registered, title transfers to you, your mortgage kicks in, and the full purchase price is paid. An assignment can happen before occupancy or during occupancy. The timing affects what the assignee is walking into and what they’re on the hook for immediately.
The Part That Surprises Most Sellers? You’re Not Off the Hook Yet!
Many assignors assume that once they sign over their contract, they’re done. They’re not. The assignor remains legally responsible under the original APS until final closing. If the assignee defaults, the assignor can still be held liable by the builder. This is not a minor footnote. It’s one of the most significant risks in the transaction and one of the most commonly overlooked. This is why every assignment – without exception – should be reviewed by a real estate lawyer before anything is signed.
The Lawyers In The Room
A standard assignment transaction involves three legal parties:
- The assignor’s lawyer: protects the original buyer, prepares the assignment agreement
- The assignee’s lawyer: protects the new buyer, reviews the risks and closing details
- The builder’s lawyer: represents the builder and must approve the assignment
If private or commercial financing is involved, a lender’s lawyer may also be required. This isn’t a transaction you navigate with just your agent and a handshake. The moving parts are real, and the consequences of getting it wrong are financial.
What Agents Often Get Wrong
Assignments aren’t standard resale transactions dressed up in different language. The contract structure is different, the closing process is different, the tax implications are different, and the liability exposure is different. Agents who treat them like a regular sale without understanding builder consent requirements, HST implications, or occupancy period obligations are doing their clients a real disservice. Anyone working with a client on an assignment on any side of the transaction needs to make sure they understand the original APS, get builder approval confirmed before marketing, and have a lawyer who knows new builds involved from the beginning.
The Bottom Line
Assignment sales can be a smart move for the right buyer or seller but only when handled correctly. The complexity isn’t a reason to avoid them. It’s a reason to approach them properly. If you’re considering an assignment in Ontario, we’re here to walk you through it. The Bailey Team works with clients on assignment transactions regularly and partners with legal professionals who specialize in exactly this.
Have questions about an assignment? Contact us here.
This post is for general informational purposes only and does not constitute legal advice. Please consult a qualified real estate lawyer before entering into any assignment transaction.
