If you’re excited about a particular condo development but didn't buy it as a pre-construction years ago because you missed our or for whatever reason, then buying an assignment would give you the opportunity to own that brand new unit that you desire.
Not only that, but assignment sales can give you one of the best deals in the GTA market! Why is that? Well firstly, fewer people seek out these types of sales, and in addition to fewer buyers, most real estate agents aren't familiar with the process and complexity of assignments and wouldn't bother to advertise it. Even some real estate lawyers aren't experts on this topic!
The high demand in the resale market can lead to bidding wars amongst buyers, and the buyer would most likely end up overpaying for their unit. Assignments on the other hand give buyers the opportunity to avoid the excessive competition and purchase the rights to acquire a unit for a price much lower than a resale unit!
Another advantage to buying an Assignment is that you will get a brand-new unit that automatically comes with the 7 year Tarion Warranty Program. Let’s not forget that you’ll likely move into the unit sooner instead of waiting the usual 3 to 4 years for the building to be completed!
The cost breakdown is usually fairly straight forward.
Cost relating to the unit itself:
- Profit portion (The seller's asking price subtracting the Original Purchase Price)
- Deposits the Seller had already paid to the builder.
- Lawyer fees
- Final Closing Costs including: Land Transfer Taxes, Tarion Fees, Development Levies, etc.
Closing on an assignment sale can be complicated for the assignee.
You’ll have to go through the 'closing' process twice: once when assignment deal is finalized with the Assignor, and again when you close with the builder.
*During Assignment Closing with the Assignor (seller), you as the Assignee (buyer) will pay to the Assignor their profits and paid deposits to the builder.
*During Final Closing with the Builder, you will pay the developer the remainder (Original purchase price by Assignor subtract their deposits). Typically, most buyers will pay this off through a mortgage.
Lastly, don’t forget about the interim occupancy period! Once your unit is fit to be occupied, you will pay a sum that’s approximately equal to your monthly mortgage payments and condo fees until the building is registered.
If the unit you are buying on assignment is already in interim occupancy period, then the occupancy fees will be adjusted by both parties' lawyers on Assignment Closing Date!
In addition to understanding the assignment process, you should be aware of the pros and cons that go along with buying a pre-construction condo. Your purchase will come with certain risks that the original buyer was willing to take on—such as delays to closing. On the bright side, there’s nothing quite like moving into a beautiful, brand-new condo much sooner without waiting a feww years like a pre-construction!
When handled correctly, condo assignment sales can be beneficial to buyers, sellers, and builders. Just remember that understanding the process is the key to success—which is why working with the right realtor and legal professionals is so important!