Kelly Koselek

Condos - Selling the Agreement of Purchase and Sale - Assignments

This is becoming a regular occurrence with Condominiums. A couple buys a pre-construction condo by choosing a floor plan and never actually seeing the unit (it hasn’t been built yet). It may be 2 to 3 years or more, before they will actually move in. But… what happens if their circumstances change? Suppose that they now have a baby, and they are still waiting for their one bedroom condo to be finished. They now want a two bedroom unit and need the money that they have as a deposit in their pre-construction condo so that they can buy something more suitable for their current circumstances. Can they sell the unit before it is finished construction?

The answer is… it depends. Look at the original contract to see if the Developer is allowing Assignments. Some Developers do, but you need to get permission, and there will be some administrative costs involved. There have been incidents where an unauthorized assignment has resulted in termination of the original agreement and the withholding of the deposit.

In layman’s terms – an Assignment is called selling the Agreement of Purchase and Sale, since the original purchaser hasn’t closed and therefore doesn’t have title yet, so you are basically selling ‘the paper’.

In legal terms, an assignment is essentially a sale of a contract or right to acquire property. An assignment is a transaction whereby the original purchaser (the "Assignor") of a property sells, and thereby transfers, their interest and obligations under the original contract to a new purchaser (the "Assignee"). The Assignee will generally assume all of the Assignor's duties and obligations under the original Agreement of Purchase and Sale. These rights and obligations are stated in the original Agreement of Purchase and Sale and include terms such as interest payments, taxes and maintenance fees during interim occupancy. Upon completion, the Assignee is granted the title to the real property and will incur all final closing costs.

a) Assignor: An Assignor is the original buyer of the unit from the Builder/Developer.

b) Assignee: An Assignee is the buyer of the Agreement of Purchase and Sale from the Assignor.

 

KELLY KOSELEK, BSc, M.B.A. Bus. 416-489-2121 Cell:647-273-7597
Royal LePage Real Estate Services Ltd, JOHNSTON & DANIEL DIVISION, Brokerage