Condo Assignment Explained?
In this article condo assignment explained.
A Condo Assignment sale refers to purchasing a condo from a previous buyer before the property is registered in the Land Registry System.
For example, A buyer purchases a pre-construction condo through the building sales office. Her or His intention is to live in the condo after it is completed. However should there be a change in plans. Then the buyer might decide to sell the pre-construction condo prior to taking possession. This can be accomplished using an assignment sale. The original buyer finds a new buyer. The new buyer assumes the responsibilities and enjoys all the benefits which were offered to the original buyer.
Resale Condo VS Assignment Condo
When a resale condo is purchased, the buyer actually buys a ” Real Estate”. In reality it is a property that physically exists and the buyer can see the unit in advance before purchasing.The property is also officially registered in the Land Registry System.
On the other hand, in an assignment sale, the buyer is not buying “Real Estate”, but rather the “Right to own Real Estate” essentially the buyer is purchasing the contract that exists between the original buyer and the builder.
The major difference between assignments and resale condos, is that with assignment you are not required to obtain a mortgage and the closing is some distance date in the future. Resale condos on the other hand require 5-10% as down payment, if you borrowing the money, and the closing date typically is 30, 60 or 90 days.
In some cases the builders include an assignment clause in the contract to prevent the buyer from selling their pre-construction condo before it is ready for occupancy. Not all condo builders allow for assignments to be sold and those that do allow for assignments to be sold with additional charges anywhere between $3,000 to $5,000 if the option to sell prior to occupancy is exercised.
It is important to review the documents very closely when buying pre-construction condos to ensure that you understand all the clauses. It is to your advantage to have the assignment clause included in the contract as a “back-up” option.
How an assignment condo is sold?
The majority of builders have restriction about where you are allowed to advertise your condo for sale, For example, you may not be allowed to advertise your condo assignment for sale on the MLS. The most common way is to advertise privately.
What buyers should know about Assignments Sales?
It might be tricky to find assignment sales, since they are not advertise very well. If you find someone selling an assignment, you can potentially score yourself a great deal, but only if you have market knowledge and know the the assignment is priced right.
In most instances as a buyer for condo assignment you are required to pay 15-20% of the purchase price as down payment, plus any profit that the buyer is asking for. It is highly recommended to consult a lawyer before proceeding with an assignment sale.
What Sellers should know about Assignment sale?
It must be taken into consideration, if the seller requires written permission from the builder to sell their condo. Also advertising clauses must be reviewed carefully. Advertising on MLS is in most cases are prohibited, therefore finding a buyer may seem challenging at times. Understanding why most buyers get discouraged from considering an assignment should also be taken into consideration. A few reasons to include are:
Price: If the buyer can get the same condo for the same price directly form the builder, then why should hey buy it form you?
Distance Closing: You simply cannot expect to buy a pre-construction condo and sell it in a short period of time. It takes time for Condos to appreciated in value.
Closing Costs: the closing costs for pre-construction condos are unknown. This may worry some buyers, Historically speaking, the closing costs are around $8,000 or more for a one bedroom condo
Assignment sales are not for everyone. However it is a great way for a anxious seller to unload their pre-construction condo. The buyer will have a chance to strike a great deal. The entire task from start to finish can be challenging. It requires patience and expertise especially from professional realtors and Lawyers.
For an updated list of Assignment sales visit: http://davenportvillage.ca/
For more information call 416-428-8311 or visit http://roncyhighparkhomes.com/contact-us/