Understanding Assignment Sales
An assignment sale occurs essentially when the contract of purchase and sale is "sold" to a new purchaser. You can think of it this way, when the original buyer of a property allows a new buyer to take over the original buyer’s "rights and obligations" of the initial sales contract before the deal closes on that particular property. (For a condo when the condominium corporation is formed, for a freehold on the closing date/property is occupied).
Why would a buyer sell a property before closing?
There are a vast number of reasons that can lead to a buyer wanting out of a deal and therefore to assign their purchased unit. Many buyers situations change compared to when they originally purchased the property, especially with condos where the purchase timeline can be quite long. . These changes could be things like simply needing more space space or the change of a jobs location. Another common reason is that the original purchasers has over extended themselves. This type of scenario can often provide a great for a new buyer to negotiate as the motivation to sell in this case can be very high. , On the other side of the coin, common reasons are simply investors looking to realize profit without paying any closing costs.
An assignment can often create an opportunity to purchase into a super popular development that was originally sold. This type of transaction on popular condo's for example can create an opportunity to get into a development at a lower price than when the project is fully completed.
Assignments are not usually complicated transactions. You just have to remember that since these take place before closing, there is a “pay back” to the original buyer’s for items like the original deposits, which could be multiple occurrences, plus of course profit they want to realized since the date of original purchase. As the new buyer, you will now take on all the outstanding closing costs associated with the property. This could include developer levied charges, utility hook-up fees, land transfer taxes, HST if applicable and of course your own lawyer fees.