Benefits for the Seller (Assignor)

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Summary: What are the benefits to the Assignor (original buyer/investor)?

Avoid all this:

  • Interim Occupancy Fees (often 6-12 months or longer) - see below.
  • Closing Costs, typically 5-7% of the Purchase Price  - see below
  • Land Transfer Taxes.
  • HST Rebate disqualification, up to  $24,000. See reports


Instead get this: 

  • The profit on the market appreciation of the condo unit.
  • All your Builder deposits back
  • Retain your First-Time Buyer status

You never took the title and may be entitled to the credits when you do buy a home later.


Selling by Assignment can mean: Taking your condo profit at its peak.

I have studied the investment alternative of "flip vs hold" in pre-construction condos in great detail - See my exclusive and comprehensive reports: Assignment vs Resale - A Comparison in Reports of this website. 


Avoiding occupancy costs (often 6-12 months or longer).

Occupancy fees are based on three components:

1. Interest (as allowed by the Condo Act) on balance owed the builder (purchase price fewer deposits made). This is like a "phantom mortgage". None of these payments reduces the balance owing to the builder.

2. Condo maintenance fees (builder estimated amount $ per sq ft excluding balcony- in Toronto downtown (C01 and C08) typically estimated by the builder at $0.52 to $0.55 per sq ft. Plus parking and locker fees, if any.

3. Property taxes (builder estimated amount, e.g.;  0.75% to 1.0% of purchase price).

Typically, in the City of Toronto, Occupany fees range from $1,400 (1 bed) to $1,800 (2 bed).

In addition to the fees, you will pay the following costs:

4. Utilities not included in the condo fees, typically you will pay at least hydro (separately metered).

5.  Condo Insurance to cover public liability and condo contents (get riders for locker contents).

6.  Personal Utilities (phone, internet, alarm, tv cable) - these would only be owing if you actually occupied the unit and subscribed to these optional personal services.

Rentals are possible but cumbersome: You should hesitate to rent out the unit during interim occupancy if you intend to assign it. Assuming the builder allows it (they usually do), you are unlikely to get a renter without offering a one-year lease.  A lease would limit the appeal of the assignment for a new buyer although it would attract some investors. Renters can be unco-operative for showings or not be very tidy and distract from your showings. On balance, not a good idea.

The fact is that every month that goes by, from the start of Interim Occupancy, the cost of occupancy fees, utilities and insurance are a drain on your profit.

Note: Occupany typically lasts 6-12 months but can be much longer. I have seen it last more than 2 years.

2. Not having to pay the pre-construction closing costs, including sometimes open-ended" levies. Ideally, these are "capped"

You will pay realty fees and legal fees and an assignment fee but these will be far less in total than the closing costs associated with a new condo purchase and a resale after that. If you buy and then sell after closing with the builder you have all those closing costs to pay plus you may have to return the HST Rebate (up to $24,000). See the table below.

Assign vs Double Close (close with the builder and immediately resell)

If you cannot assign the unit, you are usually better off occupying the unit yourself or renting for at least a year, from Final Closing, to avoid the HST rebate disqualification. HST Rebate is typically up to the maximum of $24,000, e.g.; condos above $450,000.

By waiting a year from Final Closing, some of the double closing costs may be negated by the rising market value of your condo and any profit you make if you rent it during this period.

Double closing costs are incurred because if you don't assign, then you close with the builder and pay all those fees and then turn around and resell your property and pay for another closing:




% of Original 
Purchase Price

Closing with Builder    
Purchase Price 400   
- Levies & Other Fees 12 - 20 3% - 5%

- Land Transfer Tax
(Province + Toronto)

8 2%
Closing the Resale    
Resale Price 500  
Realty Fees, Legal etc 35 - 40 7% - 8%
Double Closing Total Costs 55 - 68 12% - 15%

HST Rebate Clawback

If you disqualify yourself by flipping
in less than one year from the final closing.
(occupancy period does NOT count).

Up to 27  

Levies and fees are mostly independent of the purchase price, including legal fees: might range from $12,000 - $20,000. This represents 3%-5% on a $400,000 condo.

Land Transfer Taxes that are paid based on the original purchase price:

$400,000 @2% = $8,000 ($4,475 if outside Toronto)

3. Resale closing costs are a % of the resale price, e.g.; 7-8% and are highly impacted by selling price, i.e; realty fees.

So. when you double close on a $400,000 condo, you have to compensate for double closing costs: about 12-15% of your original purchase price. This is assuming you do not have to pay back the HST rebate

More expensive condos, e.g.; a $600,000 condo would require slightly less total double closing costs as a % of the original price at about 11-13%.

You may have to hold for two years to breakeven

It is not likely the market will grow enough to cover your double closing costs in one year but will require at least two years of moderate to good market growth just to cover these costs.

The time required to recover all these closing costs will be longer or shorter depending on your net proceeds from renting (cash flow) and how much you had to pay out in Occupancy fees and costs. 

And you have to ask yourself: "Do I want to be a landlord for two years or more just to breakeven?"

Bottom Line: Assigning is superior to a short term (2 years or less) flip strategy especially if you dislike the thought of managing a tenancy.

Help? I would be happy to work out an investment pro forma analysis if you are an investor wanting to look at your alternatives. 


Benefits for the Buyer (Assignee)

What are the benefits to the assignee (new buyer)?

  1. Immediate occupancy. Often faster than a buying a resale and many years sooner than buying new from the Builder.
  2. A new unit (often never occupied/never rented). May save having to pay expensive short-term rentals.
  3. All new warranties (manufacturer's 1-year on appliances and 1 & 5 & 7-year Tarion).
  4. The PDI (pre-delivery inspection) has been completed. In some cases you may get to do this.
  5. Much smaller deposit for a much shorter time than when buying pre-construction condo from the Builder at the so called "VIP" stage. Condo project is not even a hole in the ground yet!
  6. May have an opportunity to see the unit and building rather than buying from pictures (only applies if interim occupany has started).

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To:  Dennis Paradis