Assignment

What home buyers and sellers need to know about real estate assignments
What is an assignment?

An assignment is a sales transaction where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer’s rights and obligations of the Agreement of Purchase and Sale, before the original buyer closes on the property (that is, where they take possession of the property). The assignee is the one who ultimately completes the deal with the seller.

In other words, an assignment clause allows the buyer of a home to sell the place before they take possession of it.

In Ontario, assignments are more common in pre-built homes and condos than on re-sale properties, but they are possible on any type of trade.

Are assignments legal and why do they happen?

When done properly, assignments are legal and can be a useful tool for buyers and sellers. An example of this would be a situation where a buyer’s financial or personal situation changes before closing. Assigning allows them to pass along the contract to another buyer, without backing out of the deal with the seller.

For instance, someone could buy a condo that is still under construction and might not be ready for a couple of years. The buyer’s work or family situation could change during that time, causing them to change their mind about living in the condo they purchased. Another example may be where a buyer runs into financial difficulties to close on an existing house and wants to find another buyer rather than risk the financial penalties that might come with having to try to back out of the deal.

We have done 14 successful Assignments deals in last 2 years including Condos, Townhouses and Detached. As we deal with assignments please note that deposit structure, assignment options, fees involved, right to assign, permission by builder etc. are to be of utmost importance to be considered.