5 Things to Know About a Condo Assignment:

1. What is it? An assignment is essentially a sale of a contract or right to acquire property. An assignment is a transaction whereby the original purchaser (the "Assignor") of a property sells, and thereby transfers, their interest and obligations under the original contract to a new purchaser (the "Assignee"). The Assignee will generally assume all of the Assignor's duties and obligations under the original Agreement of Purchase and Sale.

2. Can I assign my investment? An assignment is legally permitted unless otherwise expressly prohibited in writing in the original Agreement of Purchase and Sale. An assignment fee may be charged by the developer and is normally a cost borne by the Assignor (the original purchaser).

3. What are my implication if the assignee does not close?: The Assignor in most cases is not released from the obligations under the Agreement of Purchase and Sale. Accordingly, both the Assignor and Assignee will be liable.

4. What about Taxes? The assignor is responsible for any capital gains. Therefore, if you purchased for $400,000 and sell for $500,000, you are responsible for capital gains of $100,000. Don’t think you’re going to avoid this as CCRA is paying a very close eye on flippers more than ever before.

5. What happens if my investment has not gone up in value? This is a risk that all investors face but have been able to avoid for the most part in today's market. If selling for a loss is not an option, be prepared to close on the property. You’ll need to qualify for a mortgage and pay all applicable taxes (land transfer and HST) on closing.