An assignment is essentially a sale of a contract or right to acquire property. An assignment is a transaction whereby the original purchaser (the “Assignor”) of a property sells, and thereby transfers, their interest and obligations under the original contract to a new purchaser (the “Assignee”). The Assignee will generally assume all of the Assignor’s duties and obligations under the original Agreement of Purchase and Sale. These rights and obligations are stated in the original Agreement of Purchase and Sale and include terms such as interest payments, taxes and maintenance fees during interim occupancy. Upon completion, the Assignee is granted the title to the real property and will incur all final closing costs.
An assignment is legally permitted unless otherwise expressly prohibited in writing in the original Agreement of Purchase and Sale. An assignment fee may be charged by the developer and is normally a cost borne by the Assignor (the original purchaser).
You need to consult the Agreement of Purchase and Sale. Generally, Developers will not permit assignments without the Developer’s consent, therefore every situation requires consultation with the Developer and your lawyer. Please note, there have been incidents where an unauthorized assignment has resulted in termination of the original agreement and the withholding of the deposit.
It all depends on whether the developer permits advertising of the assignment. Refer to the original Agreement of Purchase and Sale to see if there are any prohibitions against listing the assignment or consult the Developer (Most Agreements of Purchase and Sale contain such a prohibition).
In the event of a delay, the assignment is still valid: the Assignee has agreed to take on their agreement and all responsibilities involved in it.
This is no different than in any sale. The Assignor in most cases is not released from the obligations under the Agreement of Purchase and Sale. Accordingly, both the Assignor and Assignee will be liable.
If the Developer consents to an assignment, there will generally be an administration fee and legal fees. These fees will vary. Consult the original Agreement of Purchase and Sale and the Developer.
In an assignment, depending on the closing date and the terms of the assignment agreement that Assignor and Assignee agreed on, the Assignor is usually paid when:
Unless otherwise specified, the interest is likely to be paid to the Assignor.
Once assignment is finalized, the Assignee will typically pay occupancy costs through to the final closing and will pay the final closing costs unless specifically negotiated otherwise.