What is an Assignment of Contract?

In the realm of Vancouver real estate, a presale assignment involves transferring your original purchase agreement with the developer to another buyer before the completion of the presale project. This process allows you, as the assignor, to sell your rights to the property to a new buyer, known as the assignee.

Key Considerations Before Flipping a Presale

Here’s a detailed breakdown of what you should know about presale assignments:

1. Developer Restrictions and Approval

While many developers permit assignments, they often impose specific terms and conditions. Notably, most developers restrict listing assigned contracts on the MLS (Multiple Listing Service). This limitation aims to maintain control over their project’s inventory and pricing strategy.

2. Marketing and Selling Challenges

Unlike resale real estate transactions where buyers can view a property physically, presale assignments often lack a presentation centre or completed units to showcase. This absence can make selling assignments more challenging unless the market conditions strongly benefits sellers.

3. Financial Commitments and Fees

If you’re flipping an assignment, be prepared to fulfill financial obligations upfront. Developers typically require you to pay all deposits agreed upon in the original contract before assigning it. Additionally, developers holds the right to approve any potential buyer and the assignment agreement itself.

4. Legal and Financial Responsibilities

Once an assignment agreement is accepted, the assignor (original buyer) remains responsible until the completion of the sale. This responsibility includes ensuring all contractual obligations are met, even if the assignee (new buyer) encounters difficulties in closing the transaction. Therefore, it’s crucial to understand the potential risks involved, such as non-refundable deposits and legal liabilities.

The Assignment Process

Here’s how the assignment process generally unfolds:

• Negotiation and Agreement: Upon finding a buyer willing to take over your presale contract, both parties negotiate terms, including the sale price and deposit amounts.

• Developer Approval: The assignment must be approved by the developer, who may charge an assignment fee, typically paid at the time of approval.

• Legal Transfer: Once approved, legal documents are drafted to transfer the rights and responsibilities from the assignor to the assignee.

• Completion and Disbursement: Upon project completion, any profits from the assignment sale are dispersed according to the agreed-upon terms, minus any fees and commissions.

  
  

Presale assignments can be lucrative in a rising market, but success hinges on thorough research, understanding contractual obligations, and navigating developer restrictions. Consider consulting with a real estate agent experienced in presale transactions to ensure a smooth process and maximize your investment potential.