Intro to Assignment Sales – What You Need to Know | Own In Toronto
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Investors Guide

Intro to
Assignment Sales

What happens when a buyer sells their purchase contract before taking possession — and what it means for everyone involved in the deal.

💡 An assignment transfers the purchase contract, not the property  ·  Builder approval is required  ·  Tax implications apply to both parties — consult an accountant
01
The Basics

What Is an Assignment Sale?

An assignment sale occurs when the original buyer — called the assignor — sells their purchase agreement to a new buyer (the assignee) before the property is officially transferred into their name. What's being sold is not the physical property, but the right to complete the purchase under the original contract terms.

Assignment sales are most commonly associated with pre-construction properties. A buyer who purchased a condo unit from a developer years before completion may choose to assign their contract rather than wait for possession — locking in a profit based on price appreciation without ever taking title to the unit.

In plain terms: Think of an assignment as selling your spot in line. You agreed to buy something at a certain price. Before you pick it up, you sell your right to that purchase to someone else — ideally at a higher price than you originally paid.
02
Who's Involved

The Three Key Players

Every assignment sale involves three parties, each with distinct roles and responsibilities. Understanding who does what is essential before entering this type of transaction.

01
Original Seller
The Builder
The developer who constructed the property and originally sold the unit to the assignor. The builder must approve any assignment — without written consent from the builder, the assignor cannot legally proceed with the sale.
02
The Seller
The Assignor
The original buyer who purchased the pre-construction unit from the builder and is now selling their contractual rights. The assignor has already paid a deposit to the builder and is seeking to transfer their position — and profit from any price appreciation — to a new buyer.
03
The Buyer
The Assignee
The new buyer taking over the purchase contract. The assignee steps into the assignor's shoes and assumes all original terms, conditions, and obligations set out in the agreement between the assignor and the builder — including the closing price and any builder levies.
03
The Transaction

How Does the Money Flow?

The financial structure of an assignment sale is different from a standard resale transaction. The assignee is paying two amounts: the assignor's deposit back upfront, and the remaining balance to the builder on closing. Here's a worked example:

Example Assignment Sale Transaction
Original purchase price (paid to builder) $500,000
Assignor's deposit already paid (10%) $50,000
Balance remaining to builder $450,000
New assignment sale price $650,000
How the $650,000 is paid by the assignee:
Deposit repaid to assignor upfront $50,000
Paid to builder on closing $450,000
Profit paid to assignor on closing $150,000
Assignor's gross profit (before fees & taxes) $150,000
Before celebrating the $150,000: The assignor's actual take-home is reduced by legal fees, accounting fees, Realtor commissions, builder assignment fees, capital gains tax, and potential HST obligations. Always model the net return with your accountant before proceeding.
04
Fees & Taxes

What Are the Costs for Each Party?

Assignment sales carry costs beyond a standard purchase or sale — and both parties have potential tax exposure. The exact amounts depend on the builder's policies, the nature of the original purchase, and how the property will be used. A real estate lawyer and accountant are essential before signing anything.

Assignor (Seller) Costs
  • Legal fees
  • Accounting fees
  • Realtor commissions
  • Builder assignment fee (if applicable — some builders offer one free assignment per unit)
  • Capital gains tax on profits from the sale
  • Potential HST obligations depending on the nature of the sale
Assignee (Buyer) Costs
  • Legal fees
  • Accounting fees
  • Builder fees and development levies (from the original agreement)
  • Land Transfer Tax on closing
  • Potential HST obligations depending on the property's intended use
HST note: HST on assignment sales is a nuanced area of tax law. Whether HST applies — and who pays it — depends on several factors including the assignor's original intentions and the assignee's planned use of the property. Always confirm with an accountant before closing.
05
What to Know

Key Considerations Before You Proceed

Assignment sales are more complex than standard resale transactions. Getting expert guidance from a Realtor, lawyer, and accountant isn't optional — it's essential for both sides.

✓
Builder's Written Approval Is Required
The assignor cannot market or complete an assignment sale without the builder's explicit written consent. Review the original purchase agreement carefully — some builders restrict assignments entirely or only permit them under specific conditions.
✓
MLS Restrictions May Apply
Some builders prohibit assignment properties from being listed on MLS until a certain percentage of the development has been sold. This limits buyer exposure and means assignments are often marketed off-market, making working with an experienced Realtor even more valuable.
✓
More Complex Than a Standard Sale
Assignment sales involve the original purchase agreement, builder communications, two separate closing transactions, and coordinated legal and accounting work. Budget more time and professional fees than you would for a typical resale.
✓
Make the Agreement Conditional on Lawyer Review
Both the assignor and assignee should insist on making the assignment agreement conditional on their respective lawyer's review and approval. This protects both parties from unexpected terms buried in the original builder agreement.
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