Condo assignment sales have become a common part of Ontario’s pre-construction market, especially across the Greater Toronto Area, and in the Brampton Condo Market. For some buyers, an assignment offers a practical way to secure a newer unit without waiting through the full construction timeline. For others, it introduces risks that are not always obvious at first glance—legal obligations, tax exposure, developer restrictions, and financing uncertainty. Because assignment transactions sit between the pre-construction contract stage and final closing, they operate under a different set of rules than standard resale condos. Understanding how assignments work, what can go wrong, and where real opportunities exist is essential for anyone considering this route.
What Is a Condo Assignment Sale?
A condo assignment sale happens when the original buyer of a pre-construction condo sells their rights and obligations under the purchase agreement to a new buyer before the condo closes with the builder. In other words, the unit is not yet registered and does not have a traditional resale title transfer. The assignment buyer takes over the original contract, completes the purchase from the builder at closing, and becomes the final owner once the project is registered.
Assignments are not a loophole or informal arrangement. They are contract-based transactions that require careful documentation and typically involve the builder, lawyers, and sometimes lender conditions.
Also Read: The Complete Guide to Buying a Condo in Brampton: Prices, Fees, and Mistakes to Avoid
Why Assignment Sales Happen
Many assignment sales are driven by life changes rather than speculation. A buyer might need to relocate, face a change in income, or decide the original purchase no longer fits their needs. At the same time, assignment sales can also occur when market conditions shift. For example, if carrying costs rise or buyer sentiment cools, some purchasers may prefer to exit the contract earlier rather than close and carry the property afterward.
Common reasons for assignments include:
- Buyer’s financial situation has changed since signing
- Family needs or household size has changed
- Relocation for employment or personal reasons
- Market conditions affecting affordability or rent projections
- Investor preference to exit before closing costs apply
How a Condo Assignment Sale Works Step by Step
Although every project has unique builder rules, assignment sales generally follow a predictable sequence:
- The original purchaser confirms that assignments are permitted under the builder agreement
- The parties agree on an assignment price, deposit arrangements, and timelines
- The builder is notified and may require a formal assignment approval process
- Lawyers prepare the assignment agreement, including disclosures and adjustments
- The assignment buyer assumes the original contract and completes the purchase on closing
Unlike resale transactions, assignments require careful attention to the original Agreement of Purchase and Sale because the assignment buyer inherits many of its terms.
Key Rules Buyers Need to Understand Before Buying an Assignment
Assignment transactions are governed by three overlapping frameworks: the original builder contract, provincial legal requirements, and tax rules. Ignoring any one of these can turn an “opportunity” into an expensive misstep.
1) Builder Approval and Restrictions
Most builders require approval before an assignment can proceed. Some charge an assignment fee, require specific forms, or restrict marketing. In some cases, assignments are prohibited entirely until a certain construction milestone is reached. This matters because it affects timing, marketability, and transaction feasibility.
Before proceeding, buyers should confirm:
- Whether assignments are allowed at all
- Any builder fees or administrative costs
- Whether marketing is permitted publicly
- Whether the builder must approve the buyer’s identity
- Whether the builder limits how the sale price can be disclosed
2) Deposits and Payment Structure
In an assignment, the buyer usually reimburses the seller for deposits already paid to the builder, and may also pay an additional amount if the assignment price is higher than the original purchase price. Deposit structure varies by contract and is one of the most misunderstood parts of assignments.
Buyers must clarify:
- How much deposit has already been paid
- Where the deposit is held and under what conditions it is released
- Whether the additional assignment amount is paid immediately or in stages
- What happens if closing is delayed or the project timeline changes
3) Financing Is Not Guaranteed the Same Way as Resale
Financing can be more complex for assignment purchases. Many buyers assume they can obtain a mortgage easily because they are purchasing a new unit, but lenders treat assignment purchases differently depending on the stage of construction, registration timing, and the buyer’s ability to qualify under current rate conditions.
Common financing considerations include:
- The buyer must qualify at the time of closing, not at the time of assignment agreement
- Mortgage rates and stress tests may change before closing
- Some lenders require additional documentation for assignments
- Appraisal value at closing may differ from the original purchase price
Tax Considerations: HST and Capital Gains
Tax is one of the most important areas to address early. Assignment sales can trigger HST implications and, for sellers, capital gains exposure depending on how the original unit was intended to be used. The details depend on the buyer’s and seller’s circumstances, so professional advice is essential.
Key tax concepts to understand include:
- HST treatment may depend on whether the unit was intended as a principal residence or investment
- Assignment profits may be treated as business income rather than capital gains in some cases
- HST rebates may not transfer automatically and can affect closing costs
- Tax reporting requirements can apply even if the unit never closes under the original buyer
Because assignment tax outcomes vary significantly based on intent and usage, buyers and sellers should consult qualified tax professionals before completing the transaction.
The Real Opportunities in Assignment Purchases
Despite the complexity, assignment purchases can offer real advantages in specific market conditions. When inventory is high and buyer demand cools, assignment buyers may access pricing that reflects current conditions rather than peak pre-construction launch pricing.
Opportunities may include:
- Securing a newer unit without waiting through full construction timelines
- Potentially negotiating better value when sellers need to exit
- Access to floor plans or buildings that are no longer available from the builder
- Entering markets where resale inventory is limited
- Buying closer to completion, reducing long-term uncertainty
Assignments can be particularly attractive for buyers who prioritize newer construction but want more clarity on delivery timelines than early-stage pre-construction offers provide.
Risks That Buyers Often Overlook
The most common assignment mistakes occur when buyers treat an assignment like a resale transaction. It is not the same. The buyer inherits contractual obligations, timeline uncertainties, and cost structures that can evolve before closing.
Key risks include:
- Project delays that extend carrying plans and financing timelines
- Unexpected closing adjustments and builder charges
- Higher total closing costs than anticipated
- Mortgage qualification risk if financial conditions change
- Legal complexity if builder approval requirements are not met
The assignment buyer should conduct due diligence on the builder agreement, projected closing costs, and the building’s overall project profile.
Practical Due Diligence Checklist for Assignment Buyers
Assignment buyers benefit from treating the transaction like a structured evaluation rather than a quick purchase. A disciplined checklist helps reduce risk and clarify total cost exposure.
- Review the original Agreement of Purchase and Sale in full
- Confirm assignment permissions, builder fees, and approval process
- Request deposit receipts and verify deposit amounts paid
- Estimate full closing adjustments with a lawyer or closing cost worksheet
- Discuss financing early with a qualified mortgage professional
- Clarify HST and rebate treatment with a tax advisor
- Confirm expected occupancy and registration timelines
- Evaluate the unit’s long-term rental and resale fundamentals
- Ensure all assignment documents include clear conditions and protections
- Use a lawyer experienced in assignment transactions
Frequently Asked Questions
Is buying a condo assignment cheaper than buying resale?
It can be, but it depends on the assignment price, deposits paid, closing costs, and market conditions at the time of closing. Some assignments offer better value because the seller needs to exit and is willing to negotiate. Others can be more expensive once you account for deposit reimbursements, builder fees, and closing adjustments. The most accurate approach is to compare the assignment’s full cost structure—purchase price, deposits, and expected closing charges—against comparable resale units in the same market. A proper comparison should also consider the age and condition differences between a new unit and a resale condo.
Do I pay HST when buying an assignment?
HST implications vary based on how the unit is intended to be used and how the original purchase agreement was structured. In some cases, HST may already be included in the original purchase price; in others, rebates or additional HST may apply depending on whether the property will be owner-occupied or rented out. Assignment transactions can also involve additional tax considerations based on how the assignment amount is treated. Because small differences in intent and documentation can change the outcome, buyers should speak with a qualified real estate lawyer and tax professional before finalizing an assignment purchase.
Can a builder refuse an assignment sale?
Yes. Many builders require approval before an assignment can proceed, and they may impose conditions such as fees, paperwork requirements, or buyer qualification. Some builder agreements restrict assignments entirely or only allow them after a specific stage of construction. If the builder does not approve the assignment, the transaction may not be permitted under the original contract. For this reason, confirming assignment permissions and builder requirements is one of the most important early steps in any assignment purchase or sale.
Is financing harder for assignment purchases?
Financing can be more complicated because the buyer must qualify at the time of final closing, not when the assignment agreement is signed. Interest rates, lending policies, and stress-test requirements can change between the assignment date and the project’s completion. Some lenders also request additional documentation for assignment purchases, especially if the transaction occurs close to occupancy or registration. To reduce risk, buyers should discuss financing with a mortgage professional early, keep documentation organized, and maintain financial buffers in case qualification requirements tighten before closing.
What should I review before purchasing an assignment?
Assignment buyers should review the original builder Agreement of Purchase and Sale, confirm deposit amounts paid, and understand all expected closing adjustments and builder fees. It is also important to clarify occupancy and registration timelines, verify whether the unit’s HST treatment and rebates are included or separate, and assess resale and rental fundamentals based on location and building quality. Because assignment purchases involve inheriting contractual obligations, buyers should work with a lawyer experienced in assignment transactions and avoid treating the deal like a standard resale purchase.
Disclaimer
This article is intended for informational purposes only and does not constitute legal, financial, or tax advice. Assignment sales involve contract-specific rules and tax implications that vary by circumstance. Readers should consult qualified real estate lawyers, mortgage professionals, and tax advisors before making decisions.
