Experience At Your Service

The Process


If you have purchased a property in a development which is still under construction and wish to sell prior to closing, you must do so by way of an assignment sale. You do not have title (ownership) and the condo is not yet registered so you are selling (or assigning) your Purchase Agreement.

Get the Builder's Consent - In Principle (there is also a Final Approval)
The first step is to confirm and clarify the terms of your contract as to the conditions and costs  associated with an assignment. Usually the developer charges an administrative fee which you are responsible to pay. Most contracts restrict assignments if the Builder is still selling similar units in the same project. or it is prior to Interim Occupancy

We will prepare a letter/fax/email for you to make a formal request to the developer's lawyer to get the builder's permission for you to assign your agreement, in principle. A typical builder assignment fee is 1% of the original purchase price plus the builder's legal fees ($400 or more). 

Cost details.

Stop Paying for Interim Occupancy
We have created a process that allows you to be relieved of your interim occupany fees until final closing. This period can be from 6-24 months. The new buyer would assume the occupancy costs from date of acceptance of the assignment until closing. The new buyer would provide a reasonable deposit to secure the transaction. They would close and pay closing costs including land transfer taxes, and any levies (education, utility connections, etc.) that the builder might be allocating to the unit owners. You would get your deposit monies and profit at final closing (not at Occupancy). The buyer cannot get a mortgage until final closing to cover the costs to pay you (your deposit + profit) and the balance owed to the builder. See "Buying an Assignment" below.

List and Sell
Assuming that your Purchase and Sale Agreement (with the builder) allows you to assign the contract prior to completion (final closing) you should hire a Real Estate professional who has experience and expertise in handling condo assignments. Havng a lawyer is not sufficient as any good lawyer will tell you.

Very few Realtor's® have experience doing assignments. For an experienced Realtor® contact me, Dennis Paradis, Sales Representative, RE/MAX Hallmark York Group Realty Ltd., Brokerage, for a successful completion of your condo assignment backed by a reliable and experienced team of professionals.

See my Condo Assignment Marketing Plan

Staging

If you reach the Occupancy date, we can discuss the advantages and costs of staging in detail.

Plan "A"  is to assign you condo before reaching Occupancy. Ideally, you have at least 6 months before Occupancy is scheduled for us to get this done.
 

At Occupancy, it is highly recommended that you stage your unit for sale, especially if you are not planning to occupy it and it will be vacant. We have partnered with experienced stagers who can add the rental furniture and extras to sell your unit in weeks rather than months and you will often get a higher price. Staging costs are lower than most people assume. You can get free estimates. You will usually cover the cost of staging by the faster sale (less occupancy costs) besides getting better and more offers. This option only applies if you are into your interim occupancy period. Otherwise, there is no access and no showings. These restrictions require extra effort to create effective marketing materials compared to a standard resale.

See Staging Information

Assignment Example:

Original Purchaser buys a condo from a Builder/Developer in 2010 for $400,000 with a total down payment of 20% paid to date ($80,000), completion (closing) is scheduled for 2015. The exact date of closing may still not be announced by the Builder at this time. Let's say that Interim Occupany is scheduled for May, 2014 and it is now February, 2014.

The original purchaser (assignor) could "assign" the property to another party (assignee) for a sale price of for example, $500,000. A price an experienced assignment realtor has helped determine.

To purchase the assignment the new buyer (assignee) would pay to the assignor the following amounts in order to assume the assignment contract:

Original Builder Deposit 
(20% x 400,000 paid to date by Original Purchaser)
$80,000
Plus:  
Difference in Assignment Price from Original Price (Assignor's Gross Profit) =
(New Price $500,000 less original Price $400,000)
$100,000
 

Total Deposit/Cost today for New Buyer to Purchase Assignment =
(payable to Original Purchaser to take over contract)

Note: Since the unit is still owned by the Builder, not the assignor or assignee, it cannot be mortgaged by either party so the assignee (new buyer) cannot readily come up with funds to cover the above costs (your deposit and profit) at this point in time. We recommend the assignor get a new deposit $25,000 or 5% of Assignment Price as security, held in trust - not to be confused with the Builder's deposit paid by the assignor. Then get the assignee to assume the occupancy fees and utilities. Then wait until closing to settle the balances owed.

$180,000

 

When the property is ready for closing, perhaps 6-12 months after interim occupancy begins, the new buyer (assignee) completes the sale with the Vendor (Builder/Developer) under the same terms and conditions per the original Purchase and Sale Agreement. Usually this is when the Assignor gets his proceeds and the fees are paid to the professionals involved (realtors, lawyers, etc).