The 'Assignment' Bible

When looking to purchase a condo, there are two ways of going about it. The first is the standard, resale method. The second option, one that is still unknown to many, is by assignment.

Especially over the past year, I have encountered many clients who have had questions about the concept associated with buying by assignment. Thus, I have decided to write an "Assignment Bible" that will be broken down into several parts that will explain what an assignment is, the buying process, advantages for buyers, advantages sellers, what to expect, as well as financial aspects (ie., deposits, closing costs, levies).

When you buy a unit by assignment, you are essentially buying the right to an accepted agreement of purchase and sale that was originally  between a developer and a buyer. At this point, the Buyer becomes the Seller and is selling "their interest"in the agreement. Thus, by purchasing by assignment, you are agreeing to take over the original contract with all the terms and conditions.  This is very important to understand that unlike when you buy through a builder, you will not have a 10 day "cooling off" period (also known as the rescission period), in which your lawyer can request to make changes in the agreement (ie., cap certain costs) and you will not be able to rescind from the transaction, and still get your deposit back.

Another major difference between a resale and an assignment transaction is that because the building is not registered as a condo corporation yet, no bank or financial institution will lend you funds for the mortgage. Thus, in the meantime, you will be responsible to pay occupancy fees to the builder. Often referred to as a  "phantom mortgage", the occupancy fee is like paying rent to the builder until the condo is registered. This monthly fee is a component of 3 factors: the maintenance fees on the unit, the mortgage amount (based on current posted rates), and the taxes.On average, it takes about 4-6 months (however sometimes it can be as short as a few weeks!) for a condominium to register as a condo corporation following interim occupancy. However, in some instances, registration can be delayed an you maybe paying occupancy fees for over a year (not the norm but it still is legal).

With assignments, depending on what stage of development the condo is in, as a buyer, you need to understand that often you will be buying off of floor plans without having seen the unit it self. Condos that are in interim occupancy are available for viewings- but you need to be prepared that the certain aspects of the building, such as hallways, amenities, and the lobby (to name a few) can be still under construction for a few months until the building is finished off.

If you have any questions or comments, please contact me at joanna@remaxcondosplus.com.