Builder Assignment Closings:

Assignments closings can be extremely complicated, even for experienced realtors and some lawyers. Having an experienced assignment closing lawyer is crucial. We can assist with both purchase and sale assignment transactions.

Call us today at 416-299-0050 or email us directly to discuss your builder assignment closing.

The Importance of Sound Legal Advice

Receiving sound legal advice for an assignment APS is crucial. Not only do you want a lawyer to review the contract itself, but you may require tax advice. A prudent lawyer will be on alert for any potential HST issues on an assignment and advise their client to confer with their accountant or the Canada Revenue Agency, as necessary, to determine any tax implications for the Assignor or Assignee.

Further, our lawyers can assist in obtaining the consent of the builder to the assignment itself. The lawyers for the Assignee, Assignor and builder will work together to have all the parties execute what is commonly known as an assignment and consent agreement. In the same way a sensible buyer of a pre-construction property will seek to attain legal advice on their APS with the builder, an assignee should also request that their lawyer explain to them their responsibilities under the APS (such as agreeing to observe and perform all of the obligations that the assignor agreed to with the builder as per the original APS).

A lawyer can also explain the amounts that will need to be remitted by the assignee to the assignor. As a condition of the assignment, an assignor will want all of their deposits they have already paid to the builder from the assignee. In addition, the assignor will also want the difference between the original APS price the assignor agreed to with the builder and the assignment price with the assignee (for example, if the assignor purchased a pre-construction property for $100,000.00 and agrees to assign the APS for $150,000.00, the assignee will have to come up with $50,000.00, payable to the assignor, along with the deposits already paid by the assignor as previously mentioned).

What is an Assignment Closing?

Many would-be buyers of pre-construction properties are unable to get their hands on a new development due to factors such as financial constraints or missing the time period in which the sale of such a property comes available to public. More and more, purchasers are entering into an Assignment of Agreement of Purchase and Sale (“APS”) which allows you to purchase a pre-construction property prior to its final closing.

An Assignment APS is a contract that is drawn up which has two parties to it. The first party, known as the Assignee, is the party which aims to purchase a pre-construction property from the Assignor. The Assignor is the seller who has already executed an APS with the builder of the pre-construction development but now wishes to sell their interest to the Assignee prior to the final closing of the property.

Assignments can be highly lucrative. The sale price of an assignment will usually be above and beyond the price originally paid by the Assignor to the builder. These type of assignments are usually undertaken by investors who seek to capitalize on the appreciation of the pre-construction property between the time they sign an APS with the builder to the time they sign an assignment APS with an assignee.

In rarer circumstances, some Assignors may wish to assign their APS at the same price they originally paid the builder. This can happen for a multitude or reasons but one of the main reasons why this is done is because the Assignor no longer finds the pre-construction property suitable to their needs (financially or otherwise).

What Are The HST Implications Of The Purchase Of A Newly Built Residential Property On Assignment From A Builder?

The purchase price on the Agreement of Purchase and Sale with the Builder is already inclusive of HST and an HST New Housing Rebate. However, there are some cases where the Builder will not credit the HST New Housing Rebate on closing as a result of an Assignment, despite the eligibility of the Assignee/Purchaser for the Rebate. If you are buying on Assignment and the Builder does not credit you the HST New Housing Rebate, you will need to pay the same to the Builder as an Adjustment on final closing.

To recover your HST New Housing Rebate, you will need to apply for the HST New Housing Rebate yourself after final closing with the Builder. To be eligible for the same, you will need to have acquired the property to move into the property and that you will have actually moved into the property after closing with the Builder. Please note that if the Assignor had used the property for rental purposes after taking possession on occupancy, it will affect your eligibility for the HST New Housing Rebate and it is important to ensure the Assignor has not done so.

If you are buying on Assignment for investment purposes, you will need to obtain an HST Rental Rebate by entering into a lease to a Tenant to move into the property for at least a one-year period and apply for the HST Rental Rebate within 2 years of your final closing.

You are advised to speak to a real estate lawyer about the HST Rebate applicable to your Assignment purchase.