• Why Assignments Exist

Pre-construction condominiums in Canada are purchased years before completion — often three to six years from signing to closing. An investor who purchased a unit in 2019 may face closing in 2024 or 2025, and circumstances change in the interim. Perhaps their financial situation changed, they no longer want to take title, or the property has appreciated and they prefer to realize the profit before closing rather than after. An assignment allows them to transfer their purchase contract to a new buyer, collect the appreciated value of the contract (minus their original deposit and any applicable fees), and exit the deal without ever taking title. The new buyer steps into the original purchaser's position and closes with the builder on the original terms.

• Assignment Profit Mechanics

The assignor's profit is the difference between the original purchase price and the price the assignee pays for the contract. If you purchased a pre-construction unit in 2019 for $550,000 and the assignment price in 2024 is $750,000, the gross assignment profit is $200,000 — before taxes, agent commissions, and any assignment fee the builder charges. The assignee pays the assignment price to the assignor at the time of the assignment transaction, typically in the form of cash, because mortgages are not available on assignments (you cannot mortgage a contract; you can only mortgage a title). This means the assignee's deposit requirement is substantial and must be entirely in cash. Understanding this cash requirement before pursuing an assignment purchase is essential.

• Builder Approval and Assignment Restrictions

Assignments are not a right — they are a permission. The original purchase agreement (APS) with the builder governs whether an assignment is allowed at all, and most builders charge an assignment fee ranging from $5,000 to $20,000 or more for granting approval. Some builders restrict assignments entirely, particularly in rising markets where they prefer to capture the appreciated value themselves through higher pre-sale prices. Others allow assignments but require the assignee to qualify financially to the builder's satisfaction. Before any assignment transaction, both parties must read the original APS assignment clause carefully — and the assignor must confirm builder approval in writing before the assignment is agreed upon. Assuming an assignment is permissible without verifying is a costly error.

• How to Buy an Assignment

Assignment listings are not uniformly found on MLS. Many are shared through realtor networks, private assignment listing websites, and social media groups dedicated to pre-construction investing. When you find a potential assignment, the process involves reviewing the original APS (the contract you are assuming), negotiating the assignment price directly with the assignor, paying the required deposit in cash, obtaining builder approval, and arranging for a real estate lawyer experienced in assignments to review all documentation. Unlike a standard resale purchase, the assignee inherits the original APS terms in their entirety — including any upgrade selections, parking and locker arrangements, and closing cost estimates provided by the builder. Understanding exactly what you are assuming is essential before agreeing to an assignment price.

• Assignor and Assignee Positions at a Glance

• HST and Tax Implications for the Assignor

The tax treatment of assignment profit in Canada is one of the most misunderstood aspects of the transaction. The Canada Revenue Agency (CRA) takes the position that assignment profits earned by investors who purchased pre-construction units for speculative purposes are taxable as business income — fully included in income, not at the 50% capital gains inclusion rate. Additionally, the CRA has indicated that HST may apply to the assignment profit itself if the assignor is considered to be carrying on a business of buying and selling pre-construction contracts. The assignor must also be aware that failing to collect and remit HST when required can result in the CRA assessing it against them directly. This is a situation that genuinely requires advice from a tax accountant before you sign an assignment agreement — not after.

• HST Rebate Complications for the Assignee

The assignee faces a different HST complication on closing. When a new condominium closes in Ontario, HST is embedded in the purchase price, but buyers who intend to use the unit as their primary residence qualify for the New Residential Rental Rebate or the New Housing HST Rebate, depending on their intended use. If the assignee intends to rent the unit rather than live in it, the applicable rebate structure is different — and if the assignee originally represented to the builder (in the APS inherited from the assignor) that the unit would be owner-occupied, the rebate eligibility is compromised. Many assignment purchasers have been assessed by CRA for HST rebates improperly claimed because the original APS commitment to owner-occupancy did not reflect the assignee's actual intentions. A real estate lawyer familiar with assignment transactions will flag this issue before closing.

• Occupancy Fees in Ontario

In Ontario, a condo buyer can often move into their unit before title is formally transferred from the builder. This “interim occupancy” period — sometimes called the phantom closing period — can last 6 to 18 months. During this period, the buyer does not yet own the unit but pays an occupancy fee to the builder that approximates what a mortgage payment and condo fees would be. The assignee inherits the obligation to pay these occupancy fees once they take possession. Occupancy fees are not mortgage payments — they do not build equity and are paid entirely out of pocket. An occupancy period of 12 months on a unit with a $3,000 monthly occupancy fee represents $36,000 in non-recoverable carrying costs that the assignee must budget for before the final closing.

• Risks of Buying an Assignment

Beyond the HST and occupancy fee complexities, assignment purchases carry risks specific to the pre-construction context. Condo projects can be cancelled if the builder fails to achieve sufficient pre-sales or encounters financing difficulties — in which case the assignee's deposit is typically returned but without interest compensation for the years it was held. Project delays are common and can push the closing date — and the assignee's mortgage commitment timeline — by one to two years beyond the original schedule. If financing conditions change dramatically during the delay, the assignee may find that the mortgage they qualified for at assignment is no longer available at the eventual closing. And if the condo market softens between the assignment and closing, the assignee may close on a unit worth less than the price they paid for the contract.

• What to Look for in the Original APS

The original purchase agreement is the foundational document for any assignment transaction. Before agreeing to an assignment price, the assignee should review the APS for the assignment clause and any associated fees, the list of included features and upgrades versus anything the assignor upgraded at additional cost, the estimated closing date and any builder extension rights (a builder can often extend the closing unilaterally under tarion warranty rules), the deposit structure and how much the assignor originally paid, the builder's development levies and closing cost estimates, and any representations about owner-occupancy that may affect HST rebate eligibility. A real estate lawyer experienced in assignments should review the full document — not just the assignment clause — before any deposit changes hands.

• Know It Before You Need It

Assignment sales are a niche segment of Canadian real estate that rewards participants who have done their research before entering a transaction. The combination of HST complexity, occupancy fees, builder approval requirements, and cash-heavy deposit structures means that the margin for uninformed decisions is thin. Whether you are an assignor looking to exit a pre-construction contract or an assignee looking to enter one, assembling your professional team — a real estate lawyer with assignment experience and a tax accountant familiar with CRA's position on assignment income — before you agree to any price is the most important preparation you can do.