Assignment Bible: Part 2 : Advantages of Assignments (for Sellers/ “Assignors”)
If you have purchased a unit through a developer, and are looking to assign your agreement of purchase and sale before the condo is registered, there are many advantages to this. As an assignor, some of the benefits you will be able to take advantage of are:
1. Save on the Land Transfer Taxes: As a Seller (assignor), you will not have to pay the land transfer taxes (Provincial Land Transfer Tax) as well as the Municipal Land Transfer Tax as you will be transferring your interest, and not closing on registration with the builder. Especially if you are not a first time buyer, this will save you thousands of dollars.
2. Change in Plans? No problem: Chances are your circumstances have changed from the time you purchased through the developer, and you do not wish, or are unable to wait until registration to sell your unit. Depending on what stage of development the project is, you may be able to assign at a point where the Buyer (the assignee) will complete the scheduled deposits to the builder
3. Save on Occupancy Fees: When your unit is completed (which can be many months before registration), you will be responsible for the interim occupancy fees, which will be like paying rent to the builder until your final closing (once the building registers as a condo corporation). By assigning the interest in your unit, the occupancy fees will be assumed by the Assignee. So even if the unit is not occupied, occupancy fees are still due, which cover the maintenance fees, mortgage amount, and estimated taxes.
4) Save on Closing Costs: By assigning your unit, you will not be responsible for the closing costs (in addition to the land transfer taxes) when you close with the builder, which can include, but are not limited to levies (ie: Education Levy, Park Levy), utility installation charges (water/sewer, hydro / Enbridge gas), Law Society Insurance Levy, PST on Chattels , and legal fees (for partial discharges).
5) Retrieve Your Deposits (without waiting for registration): When you assign a unit, on the closing of the assignment (when the Assignee takes possession of the suite), you are able to get money paid out to you. Depending how much the Assignee has to put down as a deposit, the ideal situation is to get the total amount of deposits you have put down to the builder (can be up to about 25%) as well as the difference between the original purchase price and your profit. *Note: sometimes some Assignee’s do not have access to such deposits, in which case promissory notes can be drafted with instructions of repayment from the proceeds on closing.
6) First Time Buyer? Retain your “status”! If you were are a first time buyer when you purchased through the developer, by assigning your interest, you will retain your status as a first time buyer on your next purchase as you are never taking title (in Land Registry System).
If you have a unit that you are looking to assign, make sure you are working with an experienced Realtor and lawyer who will represent your best interests, and make the transaction a smooth, stress free experience!
Have any thoughts or comments? email me or comment below!
