The assignment market in Ontario is one of the more misunderstood corners of real estate law. An assignment allows a buyer — the original purchaser of a property under an Agreement of Purchase and Sale — to transfer their rights under that agreement to a new buyer before closing. In the pre-construction condominium world, assignments became common as purchasers who bought units years before completion found themselves in changed circumstances by the time closing approached.
In a shifting market, assignments raise complex legal and tax questions. Here is what both assignors and assignees need to understand before proceeding.
The Basic Mechanics of an Assignment
When you purchase a pre-construction unit, you sign an Agreement of Purchase and Sale with the developer. You are entitled to take possession of that unit when it is completed. An assignment involves you (the assignor) transferring that entitlement to another buyer (the assignee) before you actually take title.
The assignee steps into your shoes. They take on your rights and obligations under the original APS — including the purchase price, the closing terms, and all the developer’s conditions. In most cases, the original APS remains in place; what changes is who is fulfilling it.
The Developer’s Consent Requirement
Most pre-construction agreements in Ontario include a clause that prohibits assignment without the developer’s prior written consent. Developers include this clause to control who ends up as their purchasers and, in some cases, to limit the assignment market for their own business reasons.
If your APS requires developer consent, you must apply for and receive it before you can validly assign. Attempting to close an assignment without required consent can result in the assignment being void — leaving the assignor still on the hook for the original purchase and potentially exposing both parties to claims.
Some developers grant consent readily. Others charge an assignment fee — sometimes a flat fee of $1,000 to $5,000, sometimes a percentage of the assignment profit. Read your APS carefully, and review the consent requirements with your lawyer before listing the assignment.
How the Purchase Price Is Structured
When a unit is assigned, there are typically two components to the assignee’s cost:
- The original purchase price: The amount the assignor paid to the developer, which the assignee now owes on the final closing
- The assignment consideration: The amount the assignee pays to the assignor for the right to take over the contract — effectively the assignor’s profit (or loss) on the deal
In a market where pre-construction prices have appreciated significantly since the original purchase, the assignment consideration can be substantial. In a market where values have declined, some assignors are assigning at a loss — taking less from the assignee than they originally committed to paying the developer — simply to exit a contract that no longer makes financial sense.
The HST Question — And Why It Matters Enormously
HST is one of the most significant and most misunderstood aspects of pre-construction assignment sales. The rules are complex, but the key points are:
For the Assignor
If you purchased the unit as an investment (not as your primary residence) and you are selling the assignment for a profit, the Canada Revenue Agency (CRA) takes the position that the assignment profit is subject to HST. This is not widely understood, but it has been confirmed by the CRA and the courts. Failing to collect and remit HST on an assignment profit where required is a serious tax compliance issue.
For the Assignee
The assignee who takes title to a newly constructed condominium unit will be subject to HST on the purchase price at closing (builders include this in the price, or it is rebated if the unit is used as a primary residence). The interaction of HST on the assignment consideration and HST at final closing can create complexity — and unexpected costs.
Both assignors and assignees should involve a tax advisor and a real estate lawyer before proceeding with an assignment. The HST implications are real and sometimes substantial.
Interim Occupancy: The Layer Most Assignees Miss
In Ontario’s pre-construction condo market, there is typically an interim occupancy period between when the unit is ready for you to move into and when the condo corporation is formally registered and title can be transferred. During interim occupancy, you pay the developer an ‘occupancy fee’ (not rent) instead of a mortgage payment.
If you are buying an assignment and the unit is in interim occupancy — or approaching it — you need to understand this period clearly. Your real estate lawyer can explain the financial obligations during interim occupancy and ensure that the assignment agreement properly addresses who is responsible for these costs.
Protecting Yourself as an Assignee
If you are buying an assignment rather than purchasing directly from a developer, your due diligence obligations are heightened:
- Review the original APS in full — you are assuming all its obligations, including any developer-friendly clauses
- Confirm the developer’s consent has been obtained or will be obtained
- Understand what deposits the assignor has already paid and confirm they are being credited to you
- Review the developer’s most recent disclosure statement to understand any changes to the unit, building, or occupancy timeline
- Have your lawyer review the assignment agreement before you sign anything
Assignment Sales in the 2026 Market
In 2026, the Ontario pre-construction market has a significant backlog of units purchased during the 2020-2022 boom that are now approaching closing. For investors who purchased at peak prices, the financial calculus has changed. Assignment sales are increasingly common as a way to exit before final closing — particularly where the current market value has declined below the original purchase price, making the final closing financially painful.
If you are considering purchasing an assignment in this environment, the potential to acquire a pre-construction unit at below-peak pricing is real. But so are the legal and tax complexities. Do not proceed without experienced legal counsel.
Final Thoughts
Assignment sales sit at the intersection of contract law, tax law, and real estate law. They are legitimate transactions when done properly — and expensive disasters when not. Whether you are the one assigning or the one acquiring an assigned agreement, the legal mechanics deserve careful attention before any money changes hands.
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Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified Ontario lawyer.
This article is provided for general information only and does not constitute legal advice. For advice about your specific situation, please contact Goldstone Law PC directly.