The Condo Clinic: Buying a Condo by Assignment

The Thompson ResidencesQ: How is price/value of the unit determined and what is fair?

A: We look at the original price that was initially agreed upon between the vendor (builder) and the assignor, plus the marginal amount. The margin is the difference in amount of what the assignor paid the vendor at purchase of sale and the asking price at assignment. For example, a unit was bought from the vendor for $320,000 and now the offer for sale is an assignment for $355,000; and after negotiations they agree on $345,000. The price at purchase of sale would have been 320,00 plus the marginal rate of $25,000. The asking price is determined by the assignor with the advice of their real estate agent but it is not a fixed price and can be negotiated.

Q: What is the deposit structure?
A: There are no deposit structures when you buy an assignment, only when you purchase from the builder. A lot of people mistakenly believe that, because they are buying an assignment and the building is under construction, that there is a set structure. What people usually do not know is that the price is always negotiable. An assignee can negotiate with the assignor through their real estate agent on what kind of deposit structure they want. What you’ll usually see is that the assignee will deposit an amount equal to the amount the assignor put (down payment) in the assignor’s real estate brokerage’s trust account. The assignee will pay the margin most likely on closing.

Q: When do I get my keys?
A: The assignee gets their keys at occupancy. The builder is in direct contact with the assignee once the deal has been closed, meaning that the keys will be handed over from the builder to the assignee and not from the assignor to the assignee.

Q: When do I need to register the unit?
A: The unit registers when the vendor tells you it does. No one has control over the registration of the unit besides the vendor. Registration usually occurs 3-9 months after occupancy.

Q: Do I need a lawyer?
A: By law you are required to have a lawyer. It is also in your best interest to have a lawyer in order to look into and professionally sign off on your deal. Even is you have a real estate license you are still required by law to have a lawyer.

Q: Do I need a mortgage pre-approval?
A: In order to assign the unit from the assignor to your name, you (the assignee) will always have to show a mortgage pre-approval to the builder and to the assignor. The purpose of this is to have proof  that you are financially able to close on the unit and that you are not a financial risk.

Q: Where are the best deals on assignment?
A: The best deals are always with us! Assignments change all the time and we can always advise you on the best deals suited for you. During the life cycle of a building there is a period when the building is cheaper. Usually, units in a building will be less expensive when the building is in the stages of pre-construction or before occupancy. Once the building moves to the stage of occupancy you will see an increase in the price of assignments.

Found this article helpful? Check out Condo Clinic’s articles on The Process of an Assignment and Assignment Terms Defined

Yossi

Yossi Kaplan is a Toronto Real Estate Agent, Mortgage Agent and a Real Estate investor. Call Yossi with any question regarding investing in and selling your Toronto Real Estate.

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