Assignment Clauses: How to Sell Your Unit Before Closing

What an assignment is

When you purchase a pre-construction unit, you are buying the right to receive that unit at closing — not the unit itself, since it doesn't exist yet. That right, along with your obligations under the Agreement of Purchase and Sale (APS), can be transferred to a new buyer before closing. This transfer is called an assignment.

In an assignment, you become the "assignor" and the new buyer becomes the "assignee." The assignee steps into your position under the APS. They pay you the value of your deposits plus any profit (or minus any loss) negotiated between you. They then take on all of your remaining obligations to the builder — including paying the balance at closing.

Importantly, the original APS between you and the builder remains unchanged. The builder receives the purchase price they were always owed. The assignment is a separate transaction — between you and the assignee — layered on top of the original agreement.

Why buyers assign their units

Assignment happens for many reasons. Life circumstances change: a job relocation, a growing family that needs a different property, a relationship breakdown, or financial pressure can all prompt a buyer to exit a pre-construction commitment before closing. In other cases, buyers enter the pre-construction market with the intention of assigning — purchasing in a project they believe will appreciate, then selling the "paper" before closing to realize a gain without ever taking title.

Both are valid uses of an assignment clause — when one exists. The challenge is that not all purchase agreements permit assignment at all, and those that do often require the builder's written consent and payment of significant fees.

Does your APS allow assignment?

The assignment clause (or absence of one) is one of the most important provisions in your APS. Your lawyer should flag this explicitly during the 10-day cooling-off review. There are three typical scenarios:

• Assignment prohibited: Some builders explicitly prohibit assignment in the APS. If you try to assign anyway, you are in breach of the agreement and risk losing your deposits.
• Assignment permitted with builder consent: Most standard builder agreements allow assignment but require the builder's prior written approval. The builder typically has discretion to approve or reject, and will charge a fee for consent. This is the most common scenario.
• Assignment permitted freely: A minority of projects allow assignment without builder consent (though still with notification requirements). These agreements are more favorable to buyers and easier to negotiate during the cooling-off period.

If assignment is important to you — either as a potential exit strategy or because your circumstances are likely to change — negotiate for it during the 10-day period. Builders are sometimes willing to add or improve assignment rights at the time of signing as a deal sweetener. After the cooling-off period, these negotiations are much harder.

Builder assignment fees

When an assignment requires builder consent, the builder almost always charges a fee. This fee varies by builder and project. Typical ranges in Ontario:

• Flat fee: $1,500 to $10,000, payable to the builder on consent
• Percentage-based: 1–2% of the assignment sale price (common in luxury buildings)
• Legal/administrative fees: an additional $500–$2,000 for the builder's solicitor to prepare consent documents

Assignment fees are in addition to the realtors' commissions you may pay on the assignment sale (typically 2.5–5% of the assignment price, split between the listing and buying agents). Budget for all of these costs when calculating whether an assignment makes financial sense.

HST on assignment — a critical detail

The HST implications of an assignment are often misunderstood and can be costly if you get them wrong.

In Ontario, the sale of a newly constructed home is subject to HST (13%). The first buyer — you — typically received a credit or rebate for the new housing HST rebate when the purchase price was set. When you assign, the Canada Revenue Agency (CRA) may treat the profit on the assignment (the amount above your deposits) as taxable, subject to HST. Whether HST applies to the assignment price depends on whether you purchased as an individual for personal use or as part of a business activity.

The assignee's HST situation is equally important. When the assignee closes the purchase, they are buying a newly constructed home from the builder. The assignee is generally entitled to claim the new housing HST rebate — but only if they meet the eligibility criteria (primarily, that they or a family member will use the property as their primary residence). If the assignee is an investor who doesn't qualify for the rebate, the full HST on the purchase price becomes a real cost.

Both assignor and assignee should obtain independent tax advice before completing an assignment transaction. The CRA has significantly increased its scrutiny of assignment transactions, and the penalties for failing to remit HST correctly can be substantial. This is one area where specialist advice pays for itself.

What an assignment transaction looks like

Once you have builder consent (if required), finding an assignee is typically done through a real estate agent who specializes in assignments. There is no central assignment listing platform — most deals are negotiated privately or through agent networks. DeveloperDirect tracks pre-construction projects, and as the platform grows, assignment activity will be part of the project information available to registered users.

The assignment transaction itself involves several legal steps: the assignor and assignee sign an Assignment Agreement; the builder provides written consent; the assignee reviews the original APS and disclosure documents (and typically gets their own lawyer to do so); and both parties' lawyers complete the paperwork. The assignee then assumes all obligations under the original APS from that point forward — including all remaining deposit installments and the balance due at closing.

Note that an assignment does not remove you entirely from the original APS until final closing in most cases. Many builder consent agreements include a clause stating that the original buyer remains liable to the builder if the assignee defaults. Review this with your lawyer carefully.