Thinking about buying or selling a pre-construction condo contract in Leslieville but unsure how assignment sales actually work? You’re not alone. Assignments can be powerful tools, yet the rules, fees, taxes and timing can feel opaque. This guide breaks down the essentials so you can move forward with clarity and confidence. Let’s dive in.
Assignment sales defined
What an assignment is
An assignment sale happens when the original purchaser of a pre-construction condo sells their contractual rights and obligations to a new buyer before the building is registered and title transfers. The original buyer is the assignor. The new buyer is the assignee. The assignee steps into the assignor’s Agreement of Purchase and Sale, usually with the developer’s written consent.
When assignments happen
Assignments typically occur during the pre-construction period, which can last months or years between signing and final closing. Sellers may assign to take profit, change plans, or handle life events like relocation. Buyers may assign to secure a specific unit or building without waiting for a future release.
Assignment vs resale
In an assignment, you are transferring contract rights before title registration. Once the building is registered and ownership closes, any sale is a standard resale of real property. The timing difference affects taxes, HST treatment, and whether the developer must consent.
How assignments work
Who can assign
Your ability to assign depends on the original Agreement of Purchase and Sale. Many builder contracts allow assignments only with the developer’s prior written consent. Some are silent, and others prohibit assignment outright. Read your contract closely and confirm the developer’s policy in writing.
Developer consent process
Most assignments require written consent from the builder. Expect to submit identity and purchaser information for the assignee, respond to credit checks, and pay an administration or assignment fee as set out by the developer. The builder may require the assignee to sign assumption documents, releases, or indemnities, and will outline all conditions in their consent letter.
Typical timeline
- Initial purchase: Assignor signs the APS and follows the deposit schedule.
- Marketing and negotiation: Assignor finds an assignee and negotiates an assignment agreement.
- Consent request: Submit documents and fees to the developer. Processing can take a few weeks.
- Consent issued: Developer provides written conditions for both parties.
- Assignment closing: Assignee completes conditions and pays the agreed assignment price to the assignor.
- Final closing: When the project registers, the assignee completes the purchase, pays land transfer taxes and closing costs, and obtains title.
Costs, taxes, and fees
Assignment price and fees
The assignor typically receives the difference between the original contract price and the new assignment price, less any commissions, legal expenses, and the developer’s assignment or administration fee. Builder fees vary by project, and some builders also require deposit top-ups. Confirm all numbers in writing before you agree to terms.
Income tax basics
How the profit is taxed depends on your facts. If your activity resembles a business or frequent trading, the Canada Revenue Agency may treat your assignment profit as fully taxable business income rather than a capital gain. This is a key reason to obtain tax advice before listing or buying an assignment.
HST on assignments
HST rules for assignments are complex. The original sale from the builder is subject to HST, and many assignments are treated as taxable supplies as well. Whether HST is charged and who remits can depend on your structure, timing, and intended use. Get professional advice so you are not surprised by HST at closing.
Land transfer tax and closing costs
In Toronto, the assignee who takes title at final closing typically pays both the Ontario Land Transfer Tax and the City of Toronto Municipal Land Transfer Tax. Assignment sales generally do not avoid these taxes. Plan for development charges, Tarion-related fees, condo adjustments, and legal fees at closing.
Financing for assignees
Most assignments occur before the mortgage is arranged. As an assignee, you will secure financing for the final closing when the building registers. Any financing the assignor expected to use does not transfer to you. Work backward from the builder’s anticipated occupancy and registration dates to ensure your lender, lawyer, and deposit funds are ready when needed.
Leslieville market context
Leslieville and nearby East End pockets such as Riverside and the Queen East corridor have seen steady mid-rise and boutique condo growth. The mix of transit access, independent retail, and proximity to downtown has attracted both end-users and investors. In strong markets, limited resale inventory and project buzz can support assignment demand. In slower periods, assignments still move, but pricing and timing become more sensitive to the overall condo market and project-specific reputation.
Real-world scenarios
Scenario A: Profit assignment
A buyer who reserved a one-bedroom unit in 2021 for $700,000 assigns the contract in 2023 for $780,000. The developer consents and charges an administration fee. The assignor receives the difference, net of fees and taxes.
Scenario B: Consent denied
An APS explicitly prohibits assignment or gives the developer broad discretion to refuse. The builder declines consent, leaving the buyer to close as originally planned or face potential default consequences.
Scenario C: Tax surprise
An investor completes several assignments within a short period. The CRA later treats profits as business income and assesses additional tax and interest. This outcome underscores the value of pre-transaction tax advice.
Common pitfalls to avoid
- Assuming assignment is automatic. Most builders require written consent and can set conditions and fees.
- Underestimating tax and HST exposure. The way you structure the assignment and your intent can change your tax result.
- Ignoring deposit and fee mechanics. Builder fees and deposit release rules can materially affect your net proceeds.
- Mismanaging timing. If the assignee cannot close, the assignor may still be on the hook under the original APS.
- Relying on verbal assurances. Insist on written consent letters and fee confirmations.
Due-diligence checklist
- Review your APS carefully, especially the assignment clause and deposit schedule.
- Ask the developer, in writing, about consent timing, documentation, and assignment or administration fees.
- Confirm how and when deposits are handled, and what must be paid on assignment.
- Retain an Ontario real estate lawyer experienced with assignments to prepare documents and manage closing.
- Obtain tax advice on income tax treatment and any HST obligations before you market or buy an assignment.
- Verify financing feasibility and timing with your lender, including any required appraisals.
- Document commission arrangements and disclosures in the assignment agreement.
Who an assignment suits
- Assignors: You may assign if you want to realize profit, your plans have changed, or your financing no longer aligns with the builder’s timeline. Your APS and the developer’s consent policy will guide what is possible.
- Assignees: You may value securing a specific unit, floor plan, or building in Leslieville without waiting for a new sales release. Make sure the closing timeline, taxes, and costs fit your budget.
Final guidance
Assignment sales are detailed transactions with moving parts involving the developer, lawyer, lender, and both parties. Small contract nuances, HST treatment, and market timing can change outcomes. Assignment sales are complex and depend on contract wording and your tax situation. Seek independent legal and tax advice before you proceed.
Work with a trusted advisor
If you are considering an assignment in Leslieville or across Toronto’s core, you deserve calm, discreet guidance and a clear plan from offer to closing. From evaluating assignment clauses to coordinating consent, pricing, marketing, and closing, you can streamline the process and protect your interests. For private, high-touch representation on assignments and luxury condos, connect with Michelle Jalsevac.
FAQs
What is an assignment sale in Toronto condos?
- It is the transfer of contractual rights and obligations in a pre-construction purchase from the original buyer to a new buyer before title registers and the project closes.
How long does developer consent take for a Leslieville assignment?
- Processing times vary by builder, but 2 to 6 weeks is common; allow more time if documents or credit checks require additional review.
Who pays land transfer tax on a condo assignment in Toronto?
- The assignee who takes title at final closing typically pays both the Ontario Land Transfer Tax and the City of Toronto Municipal Land Transfer Tax.
Do I have to pay HST on a condo assignment in Ontario?
- Many assignments are taxable for HST purposes, but treatment depends on structure and facts; obtain professional tax advice prior to entering an agreement.
Can a developer refuse consent to assign my APS?
- Often yes, depending on the contract; many APS forms give the builder discretion to approve or refuse based on conditions stated in the agreement.
How do financing and deposits work in assignment sales?
- The assignee arranges financing for final closing when the building registers, while deposit handling follows the APS and any assignment consent terms set by the builder.
