When purchasing a pre-construction condo unit, a buyer signs an Agreement of Purchase and Sale with the condo builder, that reserves their ‘right’ to the unit they purchased.
An “Assignment” is when that condo buyer then sells the condo prior to the completion of ownership. This typically happens between the time they originally signed for the condo, and the time the building is completed.
A “Resale” transaction is when a seller actually has ownership, the building is completed and already registered, and they decide to sell. This is different than an Assignment sale.
In the case of an Assignment sale, the seller doesn’t actually own anything other than an Agreement of Purchase and Sale they originally signed. The condo isn’t registered yet, and in some cases, the condo isn’t even built yet. They are selling the “right” to that condo. So, the seller is “Assigning” (or selling) that Agreement of Purchase and Sale and the rights of the condo over to the new buyer.
Benefits of an Assignment for Sellers:
- Sell before you close
- Avoid closing costs
- Avoid occupancy fees
- No need to get a mortgage
- Cash out (get back the deposits you have paid and profit)
Benefits of an Assignment for Buyers:
- Buy a brand new, never lived in condo
- No Waiting (pre-construction condos typically take 1-5 years to build)
- Tarion Warranty
- Original VIP incentives on the contract
- Stronger negotiating power