Assignments
What are Assignments?
We often think resale or new when we think real estate. But there is also a third kind of purchase called assignments. An assignment refers to purchasing the 'rights' to a brand new condo from a previous buyer (as opposed to the developer), before the unit gets registered.
In comparison to resale there is usually no physical presence of the condo in the real world, and the unit is not yet in the Land Registry System.
Assignments are in fact a paper transaction that make you entitled to the future ownership of a condo and do not reflect the transfer of the actual property. And by purchasing the 'rights' and taking over the contract you are in fact accepting all the previous terms and obligations agreed between the builder and the original buyer.
Why Should I Care about Assignments?
Timing
Purchasing an assignment unit means buying a brand new condo without the wait, as they are not far from completion.
Lower Prices
Assignments in most cases are priced lower than what you can get direct from the developer's remaining inventory. The original buyers usually purchase their units at the beginning stages of a project, and at a much lower value than their today's price.
In addition, due to the difficulties of promoting assignments and the fact that most owners are trying to avoid occupancy or final closing, you are often in a much better position to negotiate.
Tax Benefits
There could also be benefits on saving taxes, such as land transfer tax, city tax and the double taxation when you buy re-sale.
You Get More
It is also possible that in your contract you will take advantage of many free upgrades or VIP incentives that were offered at the earlier stages of the project's life, that are no longer available or you have to pay a lot more for them.
Warranty
When you are buying assignments you are essentially buying new, which entitles you to the Tarion's Seven Year Warranty Program.
Assignments vs. Resale
With resale you are buying an actual property that has a physical existence at the time. You can touch and feel it, and when you buy it you take over the ownership of the property. Assignments are usually not available to view at the time, and since you are taking over someone else's contract you will inherit whatever agreement they originally made with the developer.
With resale you need to have a mortgage in place and the closing dates are often not that far. Assignments don't need a mortgage up front, but usually require a deposit of around 20%, and their closing dates are usually months away.
But when buying assignments you often pay less than resale and still get to live in a brand new condo with a full warranty.
Finding Assignments
Finding available assignments is a challenge. By definition builders have already sold the unit once, so they have no interest in selling it again, and there is nothing to gain from it for them. Also if the builder still has left over inventory, a new assignment unit in their project would mean direct competition to them. So even if a builder has agreed to its buyers assigning their units in the original contract, they often limit the buyers on how they can promote their assignments. Buyers usually can't advertise the unit in any classified sites, or the MLS system. We offer a host of solutions for assignments at TheRedPin, get in touch with a sales representative to learn more about our exclusive listings.
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