What is An Assignment?
Some of my readers have picked up on the fact that I am calling 2009 “The Year of the Assignment“. Ãƒâ€šÃ‚Â Last year it was all about getting into the VIP sales events. This year, savvy investors and first time buyers alike are taking a serious look at assignment sales as possibly the best way to take advantage of the current market.
It is with this in mind that I will be doing a mini-series on the blog over the next few weeks outlining the ins and outs of assignment sales and why you should care about them if you planning on being either a buyer or a seller of a Toronto condo in the next 12-18 months.
First of all, What is an Assignment?
Most people who buy a condo take ownership through the Land Registry System. Just before the day of closing, you transfer money to your lawyer and if you need additional funds via a mortgage, your lawyer will register your ownership of the property and the interest of the mortgage lender.
An Assignment means that you are buying a ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“rightÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ to own a condo that is not in the Land Registry System. Usually the condo has not been built or it is not ready for occupancy and the building has not been registered. This ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“rightÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ is just a paper transaction and not the transfer of the actual property. The closing of the Assignment occurs BEFORE the condo is registered. The individual who buys the ‘rightÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ will eventually close and register their ownership of the condo at some later date.
The number of Assignment transactions is growing rapidly. For sellers who bought a new condo from plans several years earlier and whose plans have changed, this is an opportunity to sell before they have to get a mortgage and incur additional closing costs such as that dreaded, double Land Transfer Tax. For buyers who want a brand new condo without having to wait years for construction to finish, or who can not find what they want in the resale market, it represents a lot more choice.
Most Assignments are sold on an ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“ExclusiveÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢ basis. They are also more complicated than a regular sale because a mortgage can not be obtained on the closing of the Assignment, and will need to be postponed until the day of registration. Other issues such as Occupancy, reimbursement of the sellerÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s deposits and more must be taken into account.
Questions? Looking to sell an assignment or buy one? Leave me a comment or contact me directly.