What is an Assignment Sale?

An assignment involves the transfer of the original Agreement of Purchase and Sale (APS) from the original purchaser (the Assignor) to a new purchaser (the Assignee). Instead of buying or selling the physical condo itself, the parties are trading their respective interests in the agreement. The Assignee, the new buyer, acquires the rights and obligations of the Assignor, the original buyer. Assignments are often referred to as selling the "paper" or the deal. While assignments can occur in any transaction, they are particularly common in real estate, especially for land assembly projects (where multiple lots are purchased to create a larger property, such as for a condo development) or for pre-construction condominiums. However, in Ottawa, it is uncommon for people to sell assignments for residential freehold properties (houses) due to the relatively short construction period of only six months.

What are the pros of purchasing one?

Access to Desirable Properties: Often, pre-construction projects in prime locations sell out quickly, leaving many potential buyers disappointed. However, by purchasing through an assignment sale, you can gain access to these coveted units that may otherwise be unavailable on the open market.
Potential for Profit: As Ottawa's real estate market continues to appreciate, purchasing a property during the pre-construction phase allows you to benefit from rising property values. By the time the project is completed, the market value of the condo may have increased, enabling you to sell the assignment at a higher price and realize a profit without ever owning the property.
Flexibility and Lower Costs: When you purchase a pre-construction condo through an assignment, you are essentially buying the rights to the property and the original purchase agreement. This means you can avoid some of the costs associated with traditional real estate transactions. Additionally, you may have the option to customize the unit during the construction phase, adding personal touches to suit your preferences, typically within the last year of the construction.
Mitigated Risks: Purchasing a pre-construction condo from an assignment sale in Ottawa can help mitigate certain risks associated with buying directly from a developer. For instance, you can assess the progress of construction before committing to the purchase, reducing the uncertainty of investing in a property that is yet to be built. Moreover, the assignment process allows you to inherit any warranties or guarantees offered by the developer, providing an added layer of assurance.
Time Advantage: By purchasing a pre-construction condo through an assignment sale, you can save time compared to buying directly from the developer. Typically, developers have extended construction timelines, and the process can involve delays. However, by acquiring an assignment, you can skip the waiting period and enjoy a more immediate possession of the property once the deal is closed.

To summarize, some of the best parts about assignment sales for buyers include:

Owning a brand new unit without having to wait years for it to be built
Less competition from other buyers as assignment sales are typically marketed significantly less (and are a more complex transaction, meaning a smaller buyer pool)
Less likely to enter a multiple-offer scenario for the same reason
Don’t have to worry about significant delays or project cancellations like you have when the project is just beginning

Investing in a pre-construction condo through an assignment sale in Ottawa can be an excellent opportunity for buyers looking to secure desirable properties, capitalize on potential profits, and enjoy greater flexibility in their real estate transactions. While it's important to conduct thorough due diligence and seek legal advice, the advantages of buying from an assignment sale, including access to sought-after properties, profit potential, lower costs, mitigated risks, and time advantages, make it a compelling option for astute buyers in Ottawa's thriving real estate market.