What Are Assignment Sales in Ontario?
An assignment sale is when a buyer transfers their rights to purchase a pre-construction property to another buyer before the original closing date. Instead of waiting for the builder to finish construction, the original buyer "assigns" their purchase agreement to a new buyer, usually for a profit. In Ontario's hot real estate market, assignment sales have become common in condo developments and new housing projects across the GTA.
The new buyer steps into the original agreement's terms and closes with the builder on the original closing date. The original buyer walks away with the assignment fee—the difference between what they contracted to pay and what the new buyer pays.
How Assignment Sales Work: The Step-by-Step Process
When you purchase a pre-construction property in Ontario, your purchase agreement typically includes language allowing assignment. Here's what happens:
- Original buyer signs: First buyer locks in a price with the builder, often years before completion.
- Market value rises: The property appreciates while construction continues.
- Assignment is offered: The original buyer lists the assignment (not the unit itself) for sale.
- New buyer purchases: You negotiate and pay the assignment fee on top of the builder's original price.
- Lawyer reviews: Your lawyer updates the agreement to reflect your name and ensures builder approval.
- Closing occurs: You close directly with the builder at the original agreed closing date.
The Real Costs: Assignment Fees and Hidden Expenses
Assignment sales aren't just about paying the builder's original price. You'll pay significantly more. In booming GTA markets like Toronto and Mississauga, assignment fees often range from $50,000 to $200,000+ depending on the property type, location, and market conditions.
Beyond the assignment fee, expect:
- Legal fees: Lawyer costs for agreement review and title transfer ($1,500–$3,000).
- Land transfer tax: Ontario Land Transfer Tax applies to the total purchase price you pay, not just the builder's original price. This alone can add 4–6% to your closing costs.
- Inspection and appraisal costs: $500–$1,500 to verify the unit's condition before closing.
- Mortgage insurance: If putting down less than 20%, CMHC or similar insurance applies.
- Builder's closing costs: Taxes, title insurance, and development charges still apply.
Key Risks and Considerations for Buyers
Assignment sales can be profitable, but they come with real risks. The original buyer has already locked in financing and agreed to specific closing costs. If you assume their agreement, you inherit those terms—which may no longer be competitive. Interest rates may have risen since they purchased, making your actual borrowing costs higher.
Construction delays are common in Ontario. If the builder misses the closing date, you're still legally obligated to proceed. You also assume responsibility for any building defects or design changes the original buyer accepted. Unlike purchasing an existing home, you typically can't inspect a unit mid-construction with the same thoroughness.
Builder approval is required for most assignments. Some builders limit the number of assignments or refuse them entirely for certain units. Always confirm this before committing.
Is an Assignment Sale Right for You?
Assignment sales work best if you're buying in a development with strong market momentum and can absorb the additional costs. They're ideal if you want new construction but can't wait for a traditional pre-construction purchase agreement to close. However, if market conditions cool or interest rates climb further, the assignment fee you paid may not hold its value.
Before pursuing an assignment, get a TRREB market report or speak with a local GTA realtor to understand whether the property's appreciation justifies the extra expenses. Work with a lawyer experienced in Ontario real estate to review the original agreement and flag any problematic clauses.
Ready to explore your options? Contact us to discuss whether an assignment sale makes sense for your situation, or browse available homes in Toronto and surrounding areas.
Bottom Line: Do Your Homework
Assignment sales are legitimate and can work, but only if you understand the full cost picture and have verified the property's market value. Run the numbers carefully, factor in Ontario Land Transfer Tax, and ensure your lawyer reviews the original purchase agreement thoroughly. In a competitive GTA market, an assignment sale might get you into a premium development faster—just make sure you're paying a fair price for that convenience.