Legal Must-Knows for Condo Assignment Sales in Ontario

Condo assignment sales have become increasingly common in Ontario’s real estate market, especially as pre-construction buyers look for flexibility before closing. But while the idea of stepping into—or out of—a pre-construction contract might sound simple, the legal side can be far more complicated. Whether you’re an assignor (seller) or assignee (buyer), knowing the legal must-knows is crucial to avoid costly mistakes.

1. Builder Approval Is Not Optional

• Almost all condo developers require written consent before you can assign your unit.

• Some charge an assignment fee, which can range from a few thousand dollars to a percentage of the purchase price.

• Without approval, your deal could be void, leaving both parties at risk.
  

2. The Assignment Agreement Is Binding

• Once signed, the assignee takes on the original buyer’s obligations—including deposits, closing costs, and final payments.

• Both parties should have their own real estate lawyer review the agreement to ensure obligations are clear.

• Failing to spell out responsibilities (such as occupancy fees) can create disputes.
  

3. Taxes and HST Can Be Complex

• HST may apply to assignment profits and must be reported correctly.

• The Canada Revenue Agency treats assignment profits as income in most cases, meaning tax implications can be significant.

• Both parties should seek legal and accounting advice before finalizing the deal.
  

4. Disclosure Rules Protect Buyers and Sellers

• Ontario law requires material facts to be disclosed in assignment transactions.

• Any failure to disclose builder restrictions, liens, or hidden costs can lead to legal action later.

• Transparency in the agreement reduces liability and builds trust.
  

5. Deadlines and Closing Conditions Matter

• Assignments must be completed before the builder’s final closing date.

• Missing deadlines can void the deal or cause financial penalties.

• Buyers should confirm mortgage approval timelines align with the assignment schedule.
  

Final Summary

Condo assignment sales in Ontario can be powerful tools for both buyers and sellers—but they are legally complex. From builder approval to tax obligations, the fine print matters. Working with an experienced real estate lawyer ensures you’re protected and that your deal runs smoothly. In today’s market, skipping legal due diligence could cost far more than the assignment itself.

Frequently Asked Questions

1. Is an assignment sale legal in Ontario? Yes, assignment sales are legal in Ontario, but they must comply with the terms in the purchase agreement and typically require the builder’s written approval.

2. Do you need a lawyer for an assignment sale? Absolutely. A lawyer ensures compliance with builder requirements, tax obligations, and protects both parties from hidden liabilities.

3. Who pays HST on an assignment sale in Ontario? HST is generally payable on the profit earned by the assignor. The assignee may also be responsible for HST on the original purchase price, depending on circumstances.

4. What happens if the builder does not allow assignment? If the builder prohibits assignments, the original buyer must wait until final closing to sell the condo on the open market.

5. Can an assignment deal fall through? Yes. Without proper builder approval, financing, or meeting deadlines, the deal can collapse—sometimes with serious financial consequences.