Section 08

Assignment sales: buying or selling a contract before closing

Last reviewed October 30, 2026

An assignment happens when the original buyer of a pre-construction home (the "assignor") sells their rights under the agreement to someone else (the "assignee") before the home closes. It's common with condos and less common, but possible, with freehold homes. It can solve real problems for both sides, but it comes with rules and costs.

Why assignments happen

• The original buyer's life changed: a job move, a separation, or a change in finances.
• They can't close: the appraisal came in low, or they can no longer qualify for the mortgage.
• They bought as an investment and want to realise a gain (or limit a loss) before closing.

For buyers, assignments can offer a home in a project that's sold out, sometimes closer to completion than a new purchase would be.

Builder consent and fees

Most builder agreements restrict assignments. Typical terms include:

• Consent required: you can't assign without the builder's written approval.
• Assignment fees: a flat fee, often plus legal costs, payable to the builder.
• Timing restrictions: for example, no assignment until the builder has sold a certain percentage of the project.
• Marketing restrictions: some builders prohibit listing assignments on MLS while they're still selling.
• Outright prohibition in some agreements.

If there's any chance you'll need flexibility, read the assignment clause before you sign the original agreement, and negotiate it if you can.

Tax considerations

Assignments have tax consequences that catch people out. Speak with an accountant, but be aware of the following:

• Income tax: profit on an assignment may be taxed as business income rather than as a capital gain, depending on the circumstances. Federal "anti-flipping" rules, in effect since 2023, generally treat profit from selling or assigning residential property held for less than 12 months as business income, with exceptions for certain life events.
• HST: since May 2021, assignment sales of newly built residential homes are generally subject to GST/HST on the assignment fee or profit. This affects both the price and the paperwork.
• Rebates: the assignee, not the original buyer, generally needs to qualify for any new housing rebates. A rebate the original buyer would have got may not carry over.

The CRA publishes guidance on assignment sales. Ask your accountant and lawyer to review your situation before you agree to anything.

If you're buying an assignment

• You step into the original agreement, including its closing date, adjustments and conditions. Have your lawyer review the original agreement, not just the assignment contract.
• Understand what you pay and when. Usually you reimburse the assignor's deposits plus any profit, and pay the balance to the builder at closing. Your mortgage is based on the full price.
• Check the upgrades and selections the assignor made. You're getting what they chose.
• Confirm builder consent before you pay anything.
• Check rebate eligibility in your own name.

If you're selling an assignment

• Get the builder's assignment terms in writing first.
• Price realistically. Assignment buyers compare with similar completed resale homes and with builders' current price lists.
• Budget for the builder's fee, legal costs, any agent commission and possible taxes.
• Understand that you may remain liable under the original agreement if the assignee fails to close, depending on the terms.

How the money flows: a simplified example

These numbers are purely hypothetical, to show the mechanics. Suppose the original buyer agreed to buy a new townhouse for $600,000 and has paid $60,000 in deposits. They assign the contract to a new buyer for $630,000.

• The assignee pays the assignor $90,000: the $60,000 in deposits already paid plus the $30,000 increase. HST and other adjustments may change that figure.
• At closing, the assignee pays the builder the remaining $540,000 balance (plus closing adjustments), usually with a mortgage. The lender will look at the full $630,000 price and its own appraisal.
• The assignor pays the builder's assignment fee, their legal costs, any commission, and tax on their profit.

In a falling market the numbers can run the other way, and an assignor may accept less than they paid in deposits to get out of the contract.

Alternatives to assigning

If you can't close, talk to the builder early. Some may agree to an extension, a transfer to a different unit or lot, or, rarely, a mutual release. Closing and then selling the completed home as a resale is another option, with its own costs and tax implications.