Navigating the Condo Assignment Maze in Ontario A Comprehensive Selling Guide

Selling a condo assignment in Ontario can be a smart way to exit a pre-construction purchase early, recover your investment, and possibly make a profit. But unlike a typical resale, selling an assignment involves unique steps, legal considerations, and fees. If you’re thinking about selling your condo assignment, understanding the process is essential to avoid costly mistakes and delays. This guide breaks down the key steps, what to expect, and how to protect yourself throughout the sale.

Modern condo building in Ontario, typical of pre-construction projects where assignments are common

Review Your Original Contract and Ownership Rights

Your first step is to carefully examine your Agreement of Purchase and Sale (APS). This document governs your rights and obligations and will tell you if you can assign your contract to someone else.

• Check if assignment is allowed: Some builders prohibit assignments or restrict them to certain conditions.

• Look for builder approval requirements: Many contracts require the developer to approve the new buyer.

• Identify assignment fees: Builders often charge fees for processing assignments, which can be a percentage of the purchase price or a flat fee.

• Note any timing restrictions: Some contracts only allow assignments after specific project milestones, such as completion of certain construction phases.

• Understand who pays what: The contract should specify who covers fees, legal costs, and taxes related to the assignment.

  
  

If you’re unsure about any clause, consult a real estate lawyer experienced in Ontario condo assignments. This step prevents surprises later and ensures you comply with all contract terms.

Calculate All Costs and Set Your Asking Price

Selling an assignment involves several costs beyond the original purchase price. To set a realistic asking price, you need to add up all expenses and factor in market conditions.

• Assignment fees: Builders charge these for transferring the contract.

• Real estate commissions: If you use an agent, expect to pay around 2.5% to 5% of the sale price.

• Legal fees: Both you and the buyer will need lawyers to handle the paperwork.

• Administrative fees: Some developers charge extra for paperwork or approvals.

• HST on profit: In Ontario, Harmonized Sales Tax applies to the profit portion of the assignment sale.

• Original deposit and payments: Know how much you’ve already paid to the builder to calculate your cost basis.

  
  

Once you total these costs, research recent sales of similar units or assignments in your building or area. This helps you price competitively while ensuring your profit covers all fees. For example, if your original deposit was $50,000, assignment fees total $10,000, commissions and legal fees add $15,000, and you want a $20,000 profit, your asking price should cover at least $95,000 above your original contract price.

Obtain Developer Approval and Meet Their Requirements

Most builders require formal approval before you can assign your contract. This process protects them by ensuring the new buyer meets their financial and credit standards.

• Submit an assignment application: Contact the developer’s sales office for the required forms.

• Provide buyer information: The developer may request financial documents or credit checks on the new buyer.

• Pay assignment or administrative fees: These vary widely by builder and project stage.

• Wait for approval: This can take from a few days to several weeks depending on the builder.

  
  

Keep in mind that the developer can reject an assignee if they don’t meet criteria. This risk means you should pre-qualify potential buyers before submitting their information to avoid delays or refusals.

Prepare Marketing Materials and Find the Right Buyer

Marketing your assignment effectively helps you attract serious buyers and sell faster.

• Use comparables: Look at recent sales of similar units or assignments to set a competitive price.

• Highlight key features: Emphasize location, unit size, upgrades, and expected completion dates.

• Work with experienced agents: Agents familiar with condo assignments can reach qualified buyers and navigate the process smoothly.

• Advertise on specialized platforms: Assignment sales often appear on real estate websites, forums, and social media groups focused on pre-construction properties.

  
  

Be transparent about assignment fees and approval requirements so buyers understand the full process. This builds trust and reduces negotiation issues.

Finalize the Sale with Legal and Financial Steps

Once you find a buyer and get developer approval, the final steps involve legal paperwork and financial transactions.

• Sign an Assignment Agreement: This contract transfers your rights and obligations to the buyer.

• Coordinate with lawyers: Both parties’ lawyers will handle title transfer, registration, and closing documents.

• Pay outstanding fees: Ensure all builder fees and taxes are paid promptly.

• Confirm deposit transfers: The buyer usually pays you a deposit, which you forward to the builder or hold in trust.

• Notify the builder: Submit all required documents to complete the assignment.

  
  

Timing is critical here. Delays in paperwork or payments can cause penalties or jeopardize the sale.