ASSIGNMENTS
REASSIGNMENT DEALS IN A NUTSHELL
What are reassignments?
A reassignment is an agreement to assume a purchaser’s (called the assignor) contract with a builder to close on a condominium before the building is registered. It most often happens when the assignor has already received occupancy of the property and in most cases cannot advertise the unit on MLS until after registration and closing.
Why would I want to purchase in this manner?
Because the assignor cannot list on MLS, their exposure to the sale is considerably less than in a normal real estate situation. In order to be able to “cash out” sooner, the investor will usually sell at a lower than market value price. Ideally, reassignments should be a true “win-win” situation. The investor gets their money back to invest in something new and the buyer gets a below market value property without all the uncertainties of preconstruction including when the unit will be ready, what it will look like, what is their lifestyle situation at that particular time, etc. At least half of my recent sales have been reassignments due to their exceptional value.
Reassignment costs and credits:
The costs in reassignment purchases are the same as when closing a preconstruction condominium with a builder. The buyer will have to pay the following:
Land Transfer Tax, which is standard for all purchases in Ontario. It includes both Provincial and Municipal land transfer taxes.
Builder Adjustments, which are costs only when closing with a builder. These are outsourcing costs that the builder passes along to the purchaser. The average adjustment cost is approximately $5,000 – $10,000.
Lawyer’s Fees, which are approximately $500 more expensive in reassignments as compared to a normal resale transaction, more time is required with a reassignment deal.
Typical credits can include the following:
Deposit Interest that the assignor would have received on their original deposit to the builder. The interest rate is usually very low, but the assignor has probably put down a large deposit for a long period of time.
HST Credit where the assignee (purchaser) would also receive a credit from the government for the difference in HST from the time when the assignor (seller) purchased and the assignee closed with the builder. This credit is not given at source. It must be applied for and then received by mail.
Miscellaneous Incentives such as free maintenance fees or cash back would be received by the assignee (purchaser). Generally, most of the credits come close to balancing out with the extra costs so that the closing costs are comparable or less than in resale.
