Assignment Sales in Ontario, Explained
An assignment sale lets the original buyer of a pre-construction home sell their purchase contract — not the home, which doesn't exist yet — to a new buyer before closing. It can be a genuine opportunity or an expensive misunderstanding. Here is how assignments work, what they cost, and the risks that don't show up in the listing.
What is actually being sold
When someone buys a pre-construction condo or house, what they own until closing is a contract: the Agreement of Purchase and Sale with the builder, plus the deposits they've paid in. An assignment transfers that contract. The new buyer (the assignee) steps into the original buyer's shoes — reimbursing the deposits paid so far, paying a premium (or occasionally taking a discount) for the contract itself, and taking over all remaining obligations: future deposit instalments, occupancy, and the final closing with the builder on the original terms.
Nothing about the home's price with the builder changes. If the original contract price was $700,000 and the market has risen, the assignment premium is how the original buyer captures that rise — paid to them, not the builder.
The builder's consent, and the assignment fee
Almost every builder's agreement restricts assignment: it typically requires the builder's written consent, charges an assignment fee (often several thousand dollars, plus the builder's legal fees), and imposes conditions — the assignee must qualify, marketing may be restricted (many builders prohibit public advertising of the assignment, which is why assignment listings live in a semi-private market), and some agreements allow the builder to refuse or to charge more in hot markets. Read the assignment clause in the original APS before anything else; it defines what kind of deal is even possible. If the agreement prohibits assignment outright, there is no deal to structure, whatever the seller's agent suggests.
The money: deposits, premium, and taxes
- Deposits to date — reimbursed to the original buyer at assignment, dollar for dollar. On a project sold years ago, this alone can be $100,000+.
- The premium — the profit portion, negotiated. In a flat or falling market, assignments list at zero premium or at a loss; the original buyer's deposits are still owed in full.
- HST on the assignment — this is the part buyers miss. The sale of the contract by the original buyer is generally subject to HST on the assignment price (broadly, the premium plus, in many cases, the deposits, depending on structure and the seller's circumstances — investors and flippers are treated as businesses for this purpose). Budget for HST advice from your own accountant or lawyer; guessing here is expensive. Our guide to new-build GST/HST rebates explains the related rebate side, including why first-time buyer rebates need care when a home arrives by assignment.
- At final closing — the assignee pays the builder the balance of the original contract price, plus the usual new-build extras: development levies, utility hookups, and HST on the new home itself, less any rebate they qualify for.
The risks that don't show up in the listing
Your mortgage approval comes at the end, not the beginning. Lenders finalize approval near closing, against the finished home's appraised value. If values fall between assignment and closing, you face the same shortfall problem as any buyer — with a larger contract machine behind the deal. Timelines are the builder's. Condos close in two stages (occupancy, then final closing) and delays are the norm in Ontario pre-construction; your carrying costs during occupancy (the "phantom mortgage" period) are real money. Tarion and cooling-off don't reset. The 10-day rescission period belonged to the original purchase years ago; an assignee gets the remaining warranty coverage, not a fresh one. And the original buyer's obligations don't fully vanish — most builders keep the assignor liable if the assignee defaults, which is why assignors vet assignees' financing carefully. The overall shape of a purchase, for comparison, is our guide to the full buying process in Ontario.
When an assignment makes sense
Assignments earn their complexity in narrow cases: a sold-out building or neighbourhood you genuinely can't otherwise buy into, a project nearing completion (short risk window) priced honestly against resale comparables, or a premium small enough that the total cost lands where a comparable resale would. In every case, price the whole stack — deposits back, premium, HST on the assignment, levies and closing costs — against a finished resale home you could close in 30 days. If the assignment isn't clearly better on that honest math, the resale is the better buy.
Next step
Weighing an assignment against what's simply listed? Compare it with current resale listings in the same neighbourhood — the true cost of the assignment only makes sense next to the homes you could buy instead.