Unlike other real estate markets, the Canadian market presents a unique concept – assignment condo sales, that many are unaware about. If you missed out on purchasing a unit in a project but feel that’d still be a good investment, you can find a seller to reassign the condo to you before closing.
What is an Assignment Sale?
An assignment sale occurs when the original buyer of a condominium sells their purchase contract to another buyer, before the completion of the building. This transaction is not a straightforward sale of a physical property but rather the transfer of the rights and obligations attached to a purchase agreement.
This means the new buyer steps into the shoes of the original purchaser and takes over their rights and obligations under the original contract with the developer.
Why Choose Assignment Sales?
Assignment sales present an exciting opportunity to purchase a condo that might have been unavailable or more expensive if bought directly from the developer at a later date. Some benefits include:
- Early Access to New Developments: Gves buyers the chance to secure a unit in a pre-construction project that’s nearing completion, often in prime locations.
- Potential Cost Savings: Buyers may find assignment sales at prices lower than the market value of completed units, especially if the original buyer purchased at an earlier, lower price.
- Flexibility: For sellers, assignment sales offer a way to transfer their investment without waiting for the building to complete, which works as a backup plan if they aren’t able to secure a mortgage at the time of closing.
Legal and Financial Considerations
Assignment condo sales work differently than a resale or a pre-construction sale. Let’s go through some legalities you’ll have to go through:
- Contractual Terms: Have your lawyer explain the original purchase agreement’s terms, as they will transfer to you as the new buyer. This document includes payment schedules, finishes, and any warranties.
- Developer’s Consent: Most developers require their consent for an assignment sale. They may also charge a fee but it is usually under $5,000.
- Tax Implications: Both buyers and sellers should be aware that the GST/HST costs and how they’ll be handling it. The seller should also have a clear understanding of the capital gains.
- Financing: As a buyer, you should have financial arrangements in place and understand that some lenders may have specific requirements for financing an assignment sale.
Market Trends and Considerations
Always do your research and be prepared for surprises.
- Demand and Supply Dynamics: With a growing demand for newer condos in metropolitan areas like Toronto and Vancouver, you might have to enter a bidding war.
- Research is Key: Decide factors that are important to you in a condo development. It could include future infrastructure, neighborhood amenities, and the developer’s reputation.
- Professional Guidance: Working with a local realtor who has experience in this area can provide invaluable guidance through the process.
Assignment condo sales in Canada present a unique opportunity for both buyers and sellers in the real estate market. If you’re looking for an assignment condo, Realtor Catherine Nacar would be happy to show you some condo projects in GTA.