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An assignment occurs when a buyer who purchased a pre-construction condo from the builder wants to sell that purchase.
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PROGRESS REPORTS – The new buyer should agree to keep the original buyer posted on the progress of the transaction with the Builder. This is because once the new buyer has been granted the assignment, the Builder will no longer have to deal with the original buyer, and the original buyer will therefore not be aware of the progress of the transaction and when he will be paid. This can be put into the schedule to the agreement.

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The transaction should be conditional on financing as in the normal course. However, you should ensure that the financing is arranged on the new assignment purchase price. Some mortgage agents are unfamiliar with financing an assignment transaction and as such getting approval for the loan on the new purchase price can be difficult. You should try and send the new buyer to a mortgage broker familiar with assignments to obtain the appropriate confirmation of financing.

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After the Assignment Agreement is drawn up and the conditions above are included, the agreements should be sent to the lawyer for the buyer for review and the lawyer for the seller for review. Once they have made their comments and everybody is in agreement as to the terms of the contract, the assignment application should be made to the Builder and the steps that the Builder requires for consent should be followed. This may include: confirmation of financing for the new buyer, ID confirmation for the new buyer, signing the Builder’s mandatory consent form and paying the fee.

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After you have considered the terms of the contract above, you will have to write up an agreement to assign the property. This is usually now done by way of the TREB assignment agreement to which a schedule detailing how payments will be made is attached. This schedule is attached to the agreement as is the original Agreement of Purchase and Sale with the Builder. From the buyer’s and seller’s perspective, the assignment agreement should be clearly conditional on a review of the original Builder’s deal and the Assignment Agreement with the new buyer. This will allow the original buyer and the new buyer to have their lawyers look at the terms of the assignment agreement and ensure that all of the above matters have been properly considered and addressed. This will also ensure that the lawyer for the new buyer will be able to look at the original contract with the Builder to make sure that what the original buyer says he has the right to sell is in fact what he has the right to sell. It will also give the new buyer an idea of what the closing adjustments with the Builder will be, which is particularly important if he is expected to pay for them. The entire agreement should also be made conditional on the consent of the Builder to the assignment. As noted above, the Builder must agree to the new buyer taking over and the new buyer and original buyer can only be sure that they have a deal after the Builder has consented.

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Usually the original buyer has paid deposits to the Builder under the contract. When the contract is assigned these deposits are taken over by the new buyer. The original buyer will usually want his deposits back as well as the profit on the sale. From the original buyer’s perspective, the more funds that he can obtain before final closing the better. From the new buyer’s perspective, the less he can pay before final closing the better. Please note that if the new buyer does not have sufficient funds to put down on the purchase he may not be able to cover the original buyers deposit before final closing. This is because the bank does not fund a mortgage on an assignment nor on consent of the builder. The bank funds on final closing. The way that a balance is usually struck between the new buyer and the original buyer is that upon the Builder’s signed consent to the assignment to the new buyer the original buyer receives the deposits he has paid to the Builder back. He then waits for final closing to obtain his profit. Again, however, it is important to note that each deal is different and that this can be structured in any way that the parties agree.

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