The Process - Overview

How to Assign Your Condo

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. Here are the Steps to Assign Your Condo:

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.

We can help you make your request to the Builder'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 ($800 or more). Some Builders have waived the assignment fee as a marketing incentive. Check your Agreement. This will usually be in an Amendment.

Cost details.

Interim Occupancy 
We have created a process that aims at completing the assignment prior to your Interim Occupancy Date. The Occupancy period can be from 6-24 months or more. The new Buyer (Assignee) would assume the occupancy costs from the date of acceptance of the assignment until closing. The new Buyer would provide a negotiated 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 allocate to the unit owners. You would get your deposit monies and profit at final closing (not at Occupancy). Note: The Buyer cannot get a mortgage until final closing (title transfer) to cover the costs to pay your Assignment Price (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.

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 my 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.

Sell Before Date

Plan "A"  should always be 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 (lower occupancy costs) besides getting more and better 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.

Assignment Example:

Original Purchaser buys a condo from a Builder/Developer in 2019 for $600,000 with a total down payment of 20% paid over next 12 months of $120,000.  Completion (closing) is estimated for the Fall of 2023. The exact date of closing may still not be announced by the Builder at this time. Let's say that Tentative Interim Occupancy is scheduled for May 2022. See Summary below:

Example of Timing and Transaction Costs - Summary

Event Date Amount  Line  Calculation
Assignor Buys Condo from Builder Sept/2019 $600,000 1  
Deposits paid to Builder over next 12 months - 20% by Sept/2020  ($120,000) 2  
Balance owed to Builder to be paid on Closing by Sept/2020 $480,000 3 1 - 2
Tentative Interim Occupancy Start (not guaranteed) by May, 2022      
Estimated Closing Date (not guaranteed) Fall, 2023      
Assignment Sales Price    $700,000 4  
Gross Profit   $100,000 5 1 - 4
Return of Deposit to Assignee   $120,000 6  
Assignee pays Assignor Gross Profit + Deposit  Fall,2023 $220,000 7 5 + 6


The original purchaser (Assignor) could "assign" the property to another party (Assignee) for a sale price of for example, $700,000. 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  Deposit paid Builder by Assignor 
(20% x 600,000 paid to date by Original Purchaser) 		$120,000
Plus:  
Difference in Assignment Price from Original Price (Assignor's Gross Profit) =
(New Price $700,000 less original Price $600,000) 		$100,000
 

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

The Assignee must also pay the Balance Owed the Builder, Closing Costs and Interim Occcupancy Costs.

Note: Since the unit is still owned by the Builder, not the assignor or a\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, i.e.; $70,000 or 10% of the New Sale 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.

Note: An Advance Payment to the Assignor may be possible to negotiated - ask me about this.

 $220,000

 

When the property is ready for cCosing, perhaps 6-12 months after interim occupancy begins, the new buyer Assignee) completes the sale with the Vendor (Builder/Developer) under the terms and conditions per the original Purchase and Sale Agreement.

Caution: Builder's Assignments terms may chnage some of the original terms that applied to the origimal purchase. For example; some marketing incentives may not br transferrable to the new buyer. (free subway pass for a year. 

At Final Closing, the Assignor gets his/her proceeds and the fees are paid to the professionals involved (realtors, lawyers, etc) on both sides. 

See Condo Assignment - Details (Sellers & Buyers)