What are the benefits to the assignor (original buyer)?

1. Not having to pay the occupancy fees until closing.
2. Not having to pay the closing costs, including those "open ended" levies.
3. Not having to pay the Land Transfer Taxes
4. Getting the deposit back (including the interest paid by the Vendor).
5. Making a reasonable profit on the market appreciation of the condo unit.

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

1. Immediate occupancy.
2. A new unit (often never occupied/never rented).
3. All new warranties (appliances and Tarion).
4. The PDI (pre-delivery inspection) has been completed.
5. Much smaller deposit for a much shorter time than when buying new.
6. Opportunity to see the unit and building rather than buying from pictures.

What is the biggest challenge/risk to completing the assignment?

Getting the builder's consent. The builder/vendor has the absolute authority written into their agreements to reject any and all requests for unit buyers to assign their agreements prior to closing. Assignors usually have to pay some fees even if the request to assign is rejected. And, if you get permission, you still pay the fees (no refunds) if you do not get it assigned before closing (a date after which unit buyers can rent or sell without asking for the builder's consent).

Why would builders not allow assignments?

Builders do not want to compete with current unit buyers for the sale of remaining inventory. If they have sold all their units or perhaps sold all units of your type, they are more inclined to grant permission for assignments as they make some money on the fees (1% of the original purchase price for example).

Why are some buyers reluctant to do assignments?

A concern some buyers have is not knowing when closing will be and they are paying the occupancy fees (like rent with no credit towards the purchase price) up to closing. Usually closings occur 2-4 months after interim occupancy but builders do not guarantee this and closing can take longer (up to 12 months from interim occupancy). Builders are motivated to get the building registered as a condominium corporation and do the closings to get their monies - delays cost them money.

Are vacant units harder to sell than furnished units?

Yes. We recommend that assignors make use of a specialized staging service that provides furnishings and staging that will usually sell the unit faster (saving occupany fees) and for a better price. You can get preliminary estimates by phone and complete quotes at no cost or obligation after our stager visits your unit. We highly recommend you consider HomeonDisplay

Assign That Condo.com makes no fees for endorsing Home on Display and we have no financial connection whatsoever with this company.

We, at AssignThisCondo.com, will provide a $200 incentive against your costs of using this (or any other) staging service upon the successful sale of your unit.

Do assignment realty fees cost more than resale?

Our Realty fees are higher for assignments than resales. Our fees are 6% of the total purchase price plus GST. This fee covers the listing service and the co-op buyer fees (the fees paid to the agent/brokerage representing the new buyer/assignee). The Buyer (co-operating brokerage) side of the transaction is paid 2.5% from the 6%. If we should represent both sides (we have done this successfully - called "multiple representation") the fees remain the same. In our experience, we do 80% of the work involved since many Buyer representatives are not experienced in handling assigments and we must be sure that they properly inform their clients. We are sure there are exceptions.

The additional costs for the assignor is the Builder/Vendor assignment and legal fees.

The additional cost for the assignee is the interim occupancy fees and the usually uncapped levies for education and utilities plus the usual closing costs.

See Costs.

Are there tax considerations with assignments?

When is there not tax considerations?

GST is included in the Price for the assignment. Like a resale, assignments are priced with GST included.

GST Rebate. We recommend inserting a clause in Schedule "A" that clearly states that the new buyer (assignee) accepts the responsibility for the GST rebate that forms part of the original purchase price. If the assignee does anything after closing to disqualify himself for this rebate that the builder is owed, then the builder has the right to be compensated by the assignee. Assignees disqualify themselves for the GST rebate by renting or selling their units within one year of closing.  The GST rebate is 1.5% of the original purchase price (plus upgrades) for values up to $350,000 (that's a max of $5,250).

Income tax is a whole other consideration and you need to consult a tax expert on this. One of the issues faced by the assignor is the tax implications of the profit (if any) on the assignment being taxed as income or capital gains. This distinction and the way it is determined makes a huge difference in taxes paid by the assignor. Again, consult an expert.

Why do builders sell pre-construction condos at prices that seem to allow buyers/investors to make a profit by flipping?

Pre-construction prices are generally lower than those of existing condominium resales. This brings up two obvious questions: 1) Why do developers discount the units for pre-construction buyers? and 2) Why do they sell pre-construction rather than build first? The answer to both questions is the same--they have to.

The prices are discounted to give buyers the incentive to buy something they can't see, touch or feel. Sky and paper are harder to sell than concrete and steel. Discounts make the difference. Developers sell pre-construction, even at the lower prices, because they must have pre-sales to get their construction loan. Lenders may require 50-80% of a project to be sold before construction can begin.

Once I have completed flipping the property, assignors have no further responsibility, right?

Wrong in most cases. You are the original buyer of the property and if the second buyer does not complete the purchase, then the developer will then expect the person flipping to close at the original purchase price. In this way, it is quite different from selling a piece of property in which you own title.