Assignment closings

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We strongly advise that you seek legal advice for all assignments. This is a formality and a crucial step to ensure your security and understanding of the process. In addition to reviewing the contracts, lawyers will be alert for any potential HST issues on an assignment and advise their clients to communicate with their accountant to determine any tax implications. Full Law can also assist in securing the builder's consent to the assignment. The lawyers for the Assignee, Assignor, and builder must collaborate effectively to have all the parties sign an assignment and consent agreement. A buyer of a pre-construction property should seek legal advice on their Agreement of Purchase and Sale (APS) with the builder. Furthermore, an assignee should consult their lawyer to understand their responsibilities under the APS.

Many prospective buyers of pre-construction properties often need help to secure one due to financial constraints or missing the initial sales period. Increasingly, buyers are turning to Assignment of Agreement of Purchase and Sale ("APS") arrangements, which allow them to acquire a pre-construction property before its final closing.

An Assignment APS is a contract involving two parties: the Assignee, who intends to purchase the property from the Assignor. The Assignor is the original purchaser who has entered into an APS with the builder but wishes to transfer their rights to the Assignee before the property's completion.

Assignments can be quite profitable. Typically, the sale price of an assignment exceeds the amount the Assignor initially paid to the builder. Investors often engage in assignments to benefit from the appreciation of the property value between signing the APS with the builder and the assignment APS with the Assignee.

Occasionally, Assignors may transfer their APS at the original purchase price paid to the builder. This can occur for various reasons, such as the property no longer meeting their financial or personal needs.

 The purchase price in the Agreement of Purchase and Sale with the Builder includes HST and an HST New Housing Rebate. However, in some cases, despite the Assignee/Purchaser being eligible for the Rebate, the Builder may not credit it upon closing due to an Assignment. If you purchase through an Assignment and the Builder does not credit you the HST New Housing Rebate, you must pay it to the Builder as an Adjustment at final closing. To claim your HST New Housing Rebate, apply for it yourself after the final closing with the Builder.

To qualify for the HST New Housing Rebate:

1. You must have acquired the property to live in.
2. It would be best to move into it after closing with the Builder.

It's important to note that if the Assignor rented out the property after taking possession or occupancy, your eligibility for the HST New Housing Rebate may be affected. Therefore, verifying that the Assignor still needs to do so is crucial.

Suppose you are purchasing through an Assignment for investment purposes. In that case, you must secure an HST Rental Rebate by leasing the property to a tenant for at least one year and applying for the HST Rental Rebate within two years of your final closing.