What Is a Condo Assignment Sale & How Does It Work in Ontario

In hot pre-construction markets, condo assignment sales are becoming a buzzword—and for good reason. These deals let you buy someone else’s purchase agreement instead of a completed condo. Sounds clever—but they come with unique rules, fees, and risks. If you’re considering this route, here’s a complete breakdown exactly how assignment sales work in Ontario, what to watch out for, and whether they might actually make sense for you.

1. What Exactly Is a Condo Assignment Sale?

• The assignor (original buyer) transfers their rights and obligations under a Purchase Agreement with a builder to a new buyer (assignee). You’re not buying a finished home—just stepping into a contract. 

• Common in pre-construction projects where there’s a long waiting period between signing and occupancy.

• Developer consent is almost always required. Some original contracts restrict assignments, charge fees, or even deny permission. Always check the original Agreement of Purchase & Sale (APS).

  
  

2. Step-by-Step: How Assignment Sales Work in Ontario

• Review original contract: Check if assignment is allowed, what fees are required, and what developer’s policies are. 

• Find an assignee (if you're the assignor): Market the contract like a product—agents, MLS, or networks. 

• Negotiate price/premium: The price often includes what has already been paid (deposit etc.) + a premium if the market has appreciated. Assignee pays these. 

• Obtain developer approval: Submit application, pay assignment fee, get the builder’s written consent. Without this, assignment may be invalid. 

• Draft Assignment Agreement: Legal document that transfers the obligation. Includes details like who pays what, timeline, deposits, closing responsibilities. 

• Closing/Completion: Assignee takes over remaining payments, construction/occupation process, closing with builder, etc.

3. Benefits vs. Risks: What to Watch Closely

Benefits	Risks
Access to units that sold out in initial pre-sale.	Developer may refuse to approve the assignment.
Potential to pick up a unit at a price that reflects earlier, lower market rates + profit built in.	Must pay assignment-related fees, possibly higher costs (legal, closing) and taxes (HST) on the profit.
Shorter waiting times compared to buying very early pre-construction.	Market could fall between original purchase and closing date, causing loss instead of profit.
For assignors: exit strategy before closing, recovery of deposits + premium (if any).	Financing can be harder—assignees must satisfy lenders who may treat assignments differently.

4. Tax & Legal Implications: What You’ll Need to Pay or Watch Out For

• HST on profit: As of May 7, 2022 in Ontario, assignment sales are subject to HST on the profit (the premium paid above the original purchase price). 

• Deposit treatment: The original deposit is generally exempt from HST if clearly identified in the agreement as such. Only the portion above the deposit (the profit) is taxed. 

• Income tax / business income: Depending on your intention (investment vs. personal use), profits may be treated as business income rather than capital gains. That has different tax rates. 

• Developer fees: Builders often impose assignment fees, approval fees, administrative costs. These add up. 

• Legal advice needed: Because contracts vary, legal wording (liabilities, obligations) can dramatically affect risk, especially if the assignor remains responsible for some risk if the assignee fails. 

  
  

Final Summary

A condo assignment sale in Ontario can offer a clever path into real estate—faster access, possible profit, and entry into units that might no longer be available directly from builders. But it’s not a free ride. It demands deep due diligence: reading your contract, verifying developer policies, understanding all fees and tax implications, and using legal/tax professionals. When done correctly, it can be a smart move. When rushed or under-informed, it can be costly.

Frequently Asked Questions

1. What is an assignment sale in Ontario? 

An assignment sale is when the original buyer of a pre-construction unit (assignor) transfers their Purchase & Sale agreement to another buyer (assignee) before the property is completed. The assignee steps into all rights, obligations, and future payments.

2. What is the risk of buying an assignment? 

Risks include developer refusing assignment, hidden fees,

unexpected closing or occupancy delays, market value dropping, financing complications, and legal liabilities if the assignor isn’t fully released from the contract.

3. Are assignment sales cheaper? 

Not always. Sometimes the premium over what the original buyer paid can be high. The savings or advantage depends on market appreciation, deposit already paid, and the negotiation. In some cases, you might pay less than current new sale pricing—but you’ll pay all extra fees and taxes.

4. Do you pay HST on an assignment sale in Ontario?

 Yes—HST is applied to the profit made from the assignment. If your assignment price exceeds your original purchase price, the difference (profit) is subject to 13% HST. The deposit you originally paid is typically not taxed again if properly described in the agreement.

5. Do you pay HST on realtor fees in Ontario? 

Generally, real estate commissions and realtor fees are taxable (HST-applicable) because they are services. They are treated separately from the assignment profit. So yes, in most cases realtor fees will include HST. (While less specific sources discuss realtor commission in assignment sales, the legal principle holds for taxable services in Ontario.)