Assigning an Agreement of Purchase and Sale can be a confusing and legally contentious activity. As the assignment of condominiums becomes more common, especially in the GTA, the need for education on this topic has increased. A Board of Directors’ Task Force has provided several tools to assist and educate Members in the process of assigning a condominium. How to Assign a Condo
1. What is a Condo assignment?
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.
2. Can an Agreement of Purchase and Sale, involving any type of real estate transaction, be assigned?
Under normal circumstances, any Agreement of Purchase and Sale can be assigned providing that agreement doesnâ€™t prohibit assignments.
3. Is an assignment legal? Condo Assignment
An assignment is legally permitted unless otherwise expressly prohibited in writing in the original Agreement of Purchase and Sale. An assignment fee may be charged by the developer and is normally a cost borne by the Assignor (the original purchaser). Condo assignment toronto
4. Is it necessary to get permission from the Seller/Developer to assign the Agreement of Purchase and Sale? All About Condo Assignments
You need to consult the Agreement of Purchase and Sale. Generally, Developers will not permit assignments without the Developers consent, therefore every situation requires consultation with the Developer and your lawyer. Please note, there have been incidents where an unauthorized assignment has resulted in the termination of the original agreement and the withholding of the deposit.
5. Is there a form for assignments? 10 Things To Know About Assignment Sales in Real Estate
Yes, there are two: OREA Form 150 Assignment of Agreement of Purchase and Sale Condominium and OREA Form 145 Assignment of Agreement of Purchase and Sale (including applicable schedules.) In most cases, the Developer will have its own form as well.
6. Will the Assignor’s or Assignee’s lawyer’s services be adequate?
It is essential that the Assignor and Assignee each retain a lawyer with expertise in this area of real estate.
7. Can the Assignor’s REALTOR® market on the MLS?
It all depends on whether the developer permits advertising of the assignment. Refer to the original Agreement of Purchase and Sale to see if there are any prohibitions against listing the assignment or consult the Developer (Most Agreements of Purchase and Sale contain such a prohibition).
8. What if the construction, occupancy, closing, or unit transfer date is delayed?
In the event of a delay, the assignment is still valid: the Assignee has agreed to take on their agreement and all responsibilities involved in it.
9. What if the Assignee doesn’t close?
This is no different than in any sale. The Assignor in most cases is not released from the obligations under the Agreement of Purchase and Sale. Accordingly, both the Assignor and Assignee will be liable.
COSTS AND FINANCING QUESTIONS
10. What is the cost of assigning an Agreement of Purchase and Sale?
If the Developer consents to an assignment, there will generally be an administration fee and legal fees. These fees will vary. Consult the original Agreement of Purchase and Sale and the Developer.
11. How does the REALTOR® deal with financing in Forms 145 and 150?
A standard financing clause may be used.
12. When does the Assignor get their money?
In an assignment, depending on the closing date and the terms of the assignment agreement that Assignor and Assignee agreed on, the Assignor is usually paid when:
a) the Assignee gets possession or occupancy or,
b) when the original seller approves the assignment, if applicable or,
c) when the Assignee obtains legal title.
13. Who gets the interest, if any, payable by the Builder on the original deposits?
Unless otherwise specified, the interest is likely to be paid to the Assignor.
14. What closing fees are payable?
See the Condominium Assignment Basic Guidelines, found on the last page of this document.
15. Who pays the interim occupancy costs?
Once assignment is finalized, the Assignee will typically pay occupancy costs through to the final closing and will pay the final closing costs unless specifically negotiated otherwise.
16. Does the Assignor have to claim Capital Gains for tax purposes?
Clause 10 of Form 150 addresses capital gains for non-residents.
Whether a resident or non-resident, the Assignor should discuss this question with a tax advisor.
- This information is provided for general information purposes only and is not to be relied upon or construed as legal, real estate, or other professional advice or opinion.