How Assignment Sales Work in Ontario Pre-Construction

An assignment is the sale of your interest in a pre-construction agreement before the building is complete and before title transfers to you. In effect, you sell your contract — not the unit itself, because you never owned the unit.

It is a useful exit when plans change or when the market moves in your favour. It is also more complicated, and more expensive, than most first-time buyers expect.

The builder has to agree

Almost every pre-construction agreement prohibits assignment without the builder's written consent. Builders grant it selectively, and their willingness varies enormously.

Some builders refuse assignments entirely until occupancy. Others allow them after a threshold — commonly once a certain percentage of units have sold. A handful actively encourage them. Check your agreement of purchase and sale for the assignment clause before you assume you have the option.

Some listings even advertise the flexibility up front. Projects marked assignment friendly are worth filtering for — you can scan the pre-construction developments directory with that in mind.

What it costs

Budget for several charges, and get each of them in writing:

• Assignment fee. Builders commonly charge a fee, or a percentage of the original purchase price, for processing the assignment.
• Legal fees for both sides. Two lawyers are involved — yours and the assignee's — plus the builder's legal review.
• Reimbursement of deposits and upgrades. The assignee typically repays your deposits, and often your upgrade costs, at the time of assignment.

The HST change that matters

Since May 2023, HST applies to the full assignment price in Ontario, not just the increase over the original purchase price. That was a significant change and it catches people out.

In practice the assignee usually pays the HST, but the mechanics depend on how the transaction is structured and who is remitting. This is precisely the point at which a real estate lawyer who regularly handles assignments is not optional.

When assigning makes sense

Assignment works best when you have a genuine reason to exit — a job move, a change in family circumstances, or a financing position that no longer fits. It works less well as a speculative flip, because the fees and HST can consume most of the gain.

If you are buying with any thought of assigning later, confirm three things before you sign: whether the builder permits it, what they charge, and roughly when they allow it. Getting those answers at the outset is far easier than negotiating them two years later.