The term “assignment sales” refers to the re-selling of pre-sale units of property during construction of a new development. An assignment sale occurs when the original purchaser sells and/or transfers all the rights and obligations of the original contract (pre-sale) between themselves and the vendor to another party, before the official completion date of the property.
Purchasing a property by way of an assignment is different from a typical real estate sale. In an assignment purchase you are buying the contract from the original purchaser and do not own the property until the unit is physically ready to be occupied.
Original Purchaser buys a condo from the Developer in 2004 for $200,000 with a total down payment of 25% paid to date ($50,000), completion is scheduled for 2006. In 2005 the original purchaser re-sells "assigns" the property to another party for a sale price of $275,000.
To purchase the assignment the new buyer must pay the following:
25% paid to date by Original Purchaser
Difference in Assignment Price from Original Price
New Price $275,000 less original Price $200,000
Total Deposit/Cost today to Purchase Assignment
Payable to Original Purchaser to take over contract
When the property is ready for occupancy in 2006 the new buyer completes the sale with the Vendor:.
In 2006 when property is complete and ready to occupy:
|Original Sale Price||$200,000|
|Original Deposit Paid||($50,000)|
Funds required to Complete Sale in 2006
(Payable to Developer/Vendor)
|Therefore the total cost for the property is $275,000 with $125,000 due immediately (payable to Original Purchaser) and $150,000 (payable to the Developer/Vendor) due at completion.|
If you have purchased a property in a development which is still under construction and wish to re-sell your unit today, you must do so by way of an assignment sale. The first step is to confirm and clarify the terms of your contract as to the conditions and costs associated with an assignment. Usually the developer charges an administrative fee which is your responsibility, in addition to any applicable commission charges (some contracts restrict assignments).
Assuming that your Purchase and Sale Agreement allows you to assign the contract prior to completion, you may either find a buyer on your own or hire a Real Estate Company such as Rennie & Associates Realty to handle the listing and sale process, for which a commission fee will be charged.
Assignments are complicated legal transactions and this is only a guideline. We recommend that you seek independent legal advice and call an independent banking representative for financing information.