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Assignments in Condominium Agreements of Purchase and Sale
Simply, an assignment is when the person who has entered into an agreement of purchase and sale with the Builder (the “Assignor”) assigns their rights and liabilities under that agreement, to another person wishing to purchase that property at a certain price (the “Assignee”) before the final closing date. The term comes up a lot for people who wish to sell their condominium unit before the final closing date for many reasons such as: Typically an Assignor will not have to pay any of the closing adjustments, land transfer tax and or have to pay the last deposit or down payment as these costs will be assumed by the Assignee on closing.
Most agreements will have a provision to allow a purchaser to assign their agreement, subject of course to an assignment fee and legal fees payable to the Builder. Further, the assignment provision will generally be subject to the Builder’s consent which may be arbitrarily withheld. The Builders may want to satisfy themselves that the Assignee can obtain financing before allowing the assignment.
When parties are entering into an assignment deal, the first step is the assignment agreement between Assignor and Assignee. This agreement should always be conditional on some of the following: The Assignee’s lawyer review of the assignment agreement as well as review of the Builder’s assignment agreement between all the parties, review of the original agreement of purchase and sale with all the schedules and amendments and if interim occupancy has occurred, review of the interim statement of adjustments. The second step is entering into the Builder’s assignment agreement which could still hold both Assignee and Assignor liable for final closing. The last step is the final closing whereby the Assignee would need to close the transaction with both the Builder and Assignor if monies are still payable to the Assignor under the assignment agreement.
Assignments may sound complicated because there are three (3) parties involved, the Assignee, the Assignor, and the Builder, compared to two (2) on a standard transaction. However, assignments are not complicated if they are properly explained and executed.
About the Author
Maxim Zavet is a real estate lawyer in the city of Toronto. His practice is primarily focused in various residential and commercial real estate transactions for individuals, corporations and developers. Maxim had worked at some of Toronto's premier real estate law firms before becoming a founder and partner at PLZ Law.-
http://www.theredpin.com Shayan Hamidi
