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With multiple Toronto pre-construction condos in the works, real estate assignments are quite common and can be a wise investment. If you’re considering buying a pre-construction condo in Toronto and selling it before you take possession or if you’re interested in taking on a real estate assignment, these are some things you need to know.
What is a Real Estate Assignment?
A real estate assignment is when the original purchaser of a pre-construction property sells their interest in the property to another buyer. The original buyer is not selling the property because they do not officially own it yet. Instead, they are selling the contract and their rights to the property.
The new buyer or assignee essentially steps into the role of the original buyer. They take on the contract and will be the one who completes the final sale. As an assignee, you cannot renegotiate the price or terms of the original contract. You simply take on the contract as it is.
In most cases, the developer must give their consent for an assignment. They also require that the new buyer pay an assignment fee. In addition, they may hold both the original and new buyers liable until closing. This and other terms will be outlined in the contract.
What Costs are Involved in a Pre-Construction Condo Assignment?
When an assignee takes on a Toronto pre-construction condo assignment, they typically pay the same deposit as the original buyer. However, as mentioned above, they may also have to pay an assignment fee to the developer, as well as land transfer taxes and HST.
There are two transactions that take place with a real estate assignment. The first is between the original purchaser and the assignee. The assignee will pay the original buyer the deposit plus any profit. Then when the contract closes, the assignee will pay the developer any remaining costs.
Why Assign a Toronto Pre-construction Condo?
There are many reasons that condo buyers might decide to assign their pre-construction condo. Usually there is a large gap in time between the purchase and the completion of the project. During that time, a lot can change in a person’s life and in the real estate market. These are a few reasons why a buyer might decide to assign their Toronto pre-construction condo:
- Investment opportunity — With the way the real estate market is booming right now, it's not unreasonable to speculate that a condo may appreciate in value even before it is completed. A buyer may be able to make a profit from an assignment.
- Life changes — A condo buyer may find that circumstances have changed in their work and home life, and it may not make sense for them to close on a condo anymore.
- Financial hardships — The original buyer may face financial difficulties, in which case it makes sense to assign the condo to get their deposit back and avoid taxes and any costs associated with reneging on the sale.
Should I Use a Real Estate Agent for my Pre-construction Condo Assignment?
Real estate assignments can be incredibly complex, so it is essential to work with a real estate agent who has a great deal of experience in assignments. Whether you are buying or selling an assignment, a real estate agent can walk you through all the steps.
For sellers, a real estate agent can help you find a buyer. Most Toronto real estate developers do not allow you to market your assignment, so you cannot list it on the MLS. Plus, the pool of assignment buyers is smaller than resale buyers, so you need an expert who knows how to reach the right market.
If you’re interested in buying a Toronto pre-construction assignment, a qualified real estate agent can advise you on prices and guide you through the terms and conditions of the contract. They can also suggest a good tax lawyer.
Are you interested in buying or selling a Toronto pre-construction condo assignment? I have years of experience working with real estate assignments in Toronto and can advise you on the latest market conditions, upcoming developments, and government regulations. Contact me online or call 647-273-1119 to talk about all your real estate needs today!