Pre Sale Information - Assignments
An assignment, by definition, is the purchase of a Pre Sale contract from the original purchaser and do not own the property until the unit is physically ready to be occupied.
The following is a summary of an assignment transaction;
A condo is purchased in 2005, by the original buyer from the Developer for $500,000 with a total down payment of $125,000 (25%). The scheduled completion is 2009.
The condo unit is then sold by the original buyer (assignor) as a resale or assignment of the condo to a second party (assignee) for $600,000 at a point prior to completion.
The purchase price of the assignment calculated as follows;
$125,000 (Original Deposit) + $100,000 (Variance between Original Price and Resale Price) = $225,0000
When the unit is ready for completion in 2009, the new buyer (assignee) sale complete the purchase of the condo with the Developer under the same contract as the original buyer.
The amount due to the developer in 2009 is $375,000 which is the original purchase price ($500,000) less the original deposit ($125,000).
Assignment contracts can either complete within one (1) month of writing a contract or when the developer finishes the building and the suite is ready for occupancy (it is negotiable). Please discuss this with the Listing Agent.
Please note, the above information is simply a guideline and legal advice should be sought before entering into an assignment contract. There may be serious consequences and losses to the new buyer (assignee) if they cannot complete on the original purchase contract. |
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