Assignment sales are one of the most powerful — and most misunderstood — instruments in the pre-construction real estate toolkit. Executed correctly, they offer investors a way to realize gains before closing, without ever taking title to the property. Here’s everything you need to know.
What Is an Assignment Sale?
An assignment sale occurs when the original purchaser of a pre-construction unit sells their purchase agreement to a new buyer before the building reaches occupancy. The original buyer (the “assignor”) transfers their rights and obligations under the agreement of purchase and sale to the new buyer (the “assignee”).
The assignee steps into the shoes of the original buyer: they assume the remaining deposit obligations, the purchase price, and the closing obligations.
Why Investors Use Assignments
Assignment sales serve several strategic purposes. First, they provide liquidity before closing — allowing investors to realize appreciation without waiting for occupancy and the subsequent resale process. Second, they can be used to redeploy capital into new pre-construction opportunities while the original unit is still under construction. Third, for investors with limited closing capacity (mortgage qualification, capital availability), assignments allow exit before the full purchase price is due.
What to Watch For
Not all purchase agreements permit assignment. Some developers restrict assignments entirely, while others permit them with consent and a nominal fee. Understanding your agreement of purchase and sale before you buy is critical — this is something we review for every client before they sign.
The assignment clause in your APS is one of the most important provisions you’ll sign. Never treat it as boilerplate.
Tax Implications
Assignment income is generally treated as business income in Canada — meaning it is taxed at your marginal rate, not at the more favourable capital gains rate. We strongly recommend consulting a tax professional before completing any assignment transaction, as the tax treatment can significantly affect net returns.
Working With a Specialist
Assignment sales require a broker who understands the nuances of the transaction — from marketing restrictions imposed by developers, to finding qualified assignees efficiently, to structuring the deal to protect both parties. Our team has completed over 200 assignment transactions and can guide you through the process seamlessly.
