Thinking about buying or selling an assignment in a downtown Toronto condo? If you want a specific floor plan, a faster path to occupancy, or a shot at launch pricing, assignments can be a smart tool. They also come with extra steps, timing variables, and legal and tax considerations you should understand before you move. This guide breaks down how assignments work in the Entertainment District so you can weigh risks and opportunities with confidence. Let’s dive in.
Assignment sales explained
What you buy in an assignment
In an assignment, you purchase the original buyer’s contractual rights and obligations under a pre-construction Agreement of Purchase and Sale. You are not buying title yet. You are stepping into the existing contract and will close with the developer later, subject to the project timeline and the contract terms.
How assignments differ from resale
Resale transfers legal title after closing. An assignment transfers the contract before closing. That usually means an extra set of documents, developer consent, and a payment to the seller of the assignment for their interest. You still assume future obligations in the original contract, including scheduled deposits and closing.
Why buyers and sellers use assignments
As a seller of an assignment, you might want to lock in profit, avoid carrying costs, or adjust to a change in plans. As a buyer, you might want a unit that sold out at launch, a preferred layout, or a specific occupancy window without waiting for a brand-new release. Some buyers are end users. Others are investors positioning for rental or future resale.
How assignments work in the Entertainment District
Launch-driven market dynamics
The Entertainment District sees frequent new-project launches and a high concentration of condo towers. That creates more assignment opportunities, but also more competition across projects and floor plans. Rental demand is supported by proximity to employment, transit, and amenities, and many buyers in this pocket are investor-focused.
Opportunities to consider
- Access sold-out or high-demand layouts without waiting for the next launch.
- Target an occupancy timeline that fits your plans, understanding dates can shift.
- Capture potential value if market pricing has moved since the original launch.
Risks to plan for
- Inventory waves can arrive at the same time, which can pressure pricing near occupancy.
- Interest rates, lending policies, and carrying costs may change before you close.
- Developer consent policies vary and can include blackout periods or added fees.
- Unit specifics such as layout and storage can affect future marketability.
Deposits, pricing, and costs
Deposit schedule and “top-ups”
Pre-construction deposits are paid in stages to the developer’s solicitor or trust account. In an assignment, you typically need to cover any remaining deposit installments called for by the original contract. This is often called a deposit “top-up.” Your assignment agreement should clearly state who pays which deposit installments and when.
Assignment price and consent fees
You negotiate an assignment price with the seller that may reflect a premium over the original purchase price. Most developers require written consent to the assignment. Consent can come with a fee and conditions such as proof of funds and identification from the new buyer. Never proceed without confirming the assignment clause and consent requirements in the original contract.
Closing, carrying, and tax considerations
- Interim occupancy: Many projects have an interim occupancy period before final registration. During this period, you may pay occupancy fees and certain costs before you take title.
- Closing costs: Expect legal fees and land transfer taxes when title transfers at final closing.
- HST and income tax: Assignments of new homes can have HST implications, and profits are often treated as business income depending on the facts. Get advice from a tax professional.
Timelines and occupancy
Key milestones
Keep an eye on the projected occupancy date, the expected building registration date, and the final closing. Your lawyer will align these dates with the assignment agreement so funds, deliverables, and obligations are sequenced properly.
Delays and cash flow planning
Delays are common. Builders can extend occupancy or registration. If you plan to move in or rent the unit at a specific time, model a range of scenarios. Consider how changing dates would affect your mortgage rate hold, carrying costs during interim occupancy, and potential gaps before a tenant moves in.
Your due diligence checklist
Legal
- Review the original Agreement of Purchase and Sale, especially the assignment clause and any blackout periods.
- Confirm the deposit ledger and how much is already paid and held in trust.
- Obtain the developer’s consent requirements and any associated fees.
- Verify project status, including construction progress and expected registration timeline.
- Ensure the assignment agreement covers price, deposit transfer, indemnities, and responsibilities for fees and adjustments. Clarify what happens if there are delays or cancellations.
- Confirm how the new-home warranty will transfer.
Tax and accounting
- Get tax advice on assignment profits, which may be treated as business income depending on your situation.
- Clarify HST treatment for the assignment and final closing.
- Budget for land transfer taxes at title transfer.
Financing and practical
- Confirm lender policies for assignment purchases and timing of mortgage approval.
- Estimate occupancy fees and early-stage carrying costs.
- Confirm insurance timing and coverage.
- Review projected condo fees and building policies that could affect rental or use.
Contract protections to seek
- Representations from the seller that there are no undisclosed encumbrances or amendments.
- Clear allocation of risk and remedies if the developer denies consent.
- Defined steps for deposit transfer and proof of funds.
Professionals to involve
- Real estate lawyer experienced in assignments.
- Accountant or tax advisor familiar with assignment taxation and HST.
- Mortgage broker or lender who understands pre-construction assignments.
- A licensed agent with assignment and new-development experience.
Two common scenarios
Seller needs to exit before closing
You bought at launch and your plans changed. Assigning can let you lock in gains or reduce future carrying costs. You will need the developer’s consent, a clear deposit accounting, and a well-drafted assignment agreement that covers timing, fees, and what happens if dates shift.
Buyer wants a specific layout and occupancy
You want a sold-out stack with a projected occupancy that fits your move. You can purchase the assignment, top up deposits, and plan for interim occupancy fees. Since timeline changes are possible, build in a buffer for mortgage rate holds, lease start dates, and moving plans.
Next steps
Assignments can be a smart path to a downtown condo in the Entertainment District, but they reward careful planning. If you want help sourcing quality opportunities, pressure-testing timelines and costs, and coordinating the right legal and lending team, reach out for a tailored plan. Start a conversation with Selin Yasar to explore the right assignment for your goals.
FAQs
Are assignment sales the same as buying a resale condo in Toronto?
- No. An assignment transfers contract rights before closing with developer consent often required, while a resale transfers legal title after the building is registered.
How much deposit do I need for an assignment purchase?
- You typically cover any remaining developer deposit installments through a top-up, plus any negotiated payment to the seller. Confirm exact amounts in the original contract and with your lawyer.
What happens if the developer will not consent to the assignment?
- If consent is required and denied, the assignment may not proceed. Your agreement should include protections or contingencies that address a consent refusal.
How are taxes handled on an assignment profit in Canada?
- Assignment profits are often treated as business income depending on your situation, and HST may apply to some assignments of new homes. Consult a tax professional for case-specific advice.
Do lenders finance assignment purchases in Toronto?
- Some lenders do, but policies vary. Get lender approval early and confirm timing relative to occupancy and final closing.
Are assignments riskier than buying a resale condo?
- They are different. Assignments include developer-performance and timing risks, plus consent and tax complexities. Resales transfer title and generally have less timing uncertainty.
