Life can change in an instant, whether it be of a positive or negative nature, things can change quickly. An assignment clause is included in the Agreement of Purchase and Sale to protect both the original buyer and the developer.
Pre-construction condos, especially those of a high-rise nature usually take between 4-5 years to complete and be ready for occupancy. Sales for these units start long before the dirt is dug up and construction starts.
Meet Jeff, Jeff is a single 27-year-old working in the health sciences field. He has saved up enough money while working to put a down payment on a pre-construction condo unit in a 30 storey condo building that is going to be built in downtown Toronto and is tentatively slated to be completed in 4 years.
Jeff pays the deposit and signs the Agreement of Purchase and Sale, now being a proud homeowner to be, he continues with his single life and successful career.
Now let’s say a couple of years from now Jeff gets a new promising new job offer in a different city, or he has met someone and sees a future blossoming between the two of them, or his financial situation may have taken a downwards spiral now leaving him unable to qualify for a mortgage or needing the pre-construction condo unit.
Jeff could also be an investor, who knows the real estate market very well. He buys contracts for units in the pre-construction phase, then as they near occupancy, he will list the unit with a real estate agent as an assignment sale to make a profit. As it has taken several years for the building to be completed, the land it sits on has appreciated in value, making the unit worth more than what the contract was originally purchased for.
Life and financial situations can drastically change for better or worse for any of us within those couple of years it takes to build a condo building from the ground up and be ready for occupancy. These are some of the reasons why assignment sales occur and have become common place amongst pre-construction builds and the developer’s Agreement of Purchase and Sale contracts.
If you need to sell or are looking to buy an assignment sale unit, we here at CondoNow have Certified Experts that can help you and answer any questions you may have.
