Assignment of Property
Our Lawyers assist in the Assignment of Property
In Canada, an “Assignment of Property” refers to a legal sales agreement
wherein the “assignor” (original buyer) of a property sells and transfers their obligations
and rights as listed in the original contract to an “assignee” (new buyer). An Assignment of
Property occurs from the time the original sales agreement has taken place between the
“vendor” (developer) and the original buyer prior to completing the property. This applies
to any amendments executed in addition to or substituted for the Assignment of Property.
Advantages and Disadvantages of an Assignment of Property
An Assignment of Property can be an efficient and profitable benefit
in real estate investment transactions. Three of its potential advantages include:
It can be more cost-effective than a double-closing
An Assignment of Property usually has only one closing cost,
thereby making transactions less expensive than a double-closing.
It can help real estate investors build and expand their
network
An investor who becomes an assignor, can quickly build and
expand their networks to a number of different individuals who they
facilitate transactions between. This is an ideal way to find more
investment opportunities.
It’s possible to earn a quick profit
Assignors collect a fee for finding the final buyer in a real
estate sales transaction. Furthermore, the assignor has the right to set the
deposit amount of non-refundable earnest money that is collected from the
buyer of the property. Additionally, the assignor still has the opportunity
to earn a profit even if the buyer has a change of heart and backs out of
the transaction.
Keep in mind that where there are advantages, there can also be certain
disadvantages of Assignments of Property. Here are 3 possible disadvantages to be aware of:
An Assignment of Property must be executed quickly
Assignment of Property contracts have an expiration date, namely
the closing date. It can often be difficult to find a feasible purchaser in the
allowable time frame between the starting date of the contract and the
property’s closing date.
Assignors aren’t granted ownership rights
the assignor isn’t allowed to renovate or make repairs to the
property once it’s under contract because they don’t own it as yet. This can be
especially difficult for any individual who purchases distressed properties as
they can be harder to sell in their current condition.
Buyers can be turned off by the assignment fee
assignment fees are typically included in a sales contract,
meaning that every party involved can see how much profit the assignor earns on
the transaction. This can be a very uncomfortable situation for some
individuals, especially when an unfamiliar purchaser believes that they’re being
taken advantage of.
It may be difficult to obtain buyer financing
the end buyer of a property must be able to pay the price agreed
upon between the assignor and the seller. This often requires that the property
be sold to a cash buyer since many lenders won’t finance Assignment of Property
contracts. Plus, cash buyers can be difficult to locate.
Some properties may not be assignable
some properties, such as CMHC (Canada Mortgage and Housing
Corporation) homes have anti-assignment clauses. This often prevents property
wholesalers from trading CMHC properties via an Assignment of Property contract.
Why do You need a Real Estate Lawyer for an Assignment of Property?
Hiring a real estate lawyer can be an important decision especially when
it comes to backing out of a real estate transaction because of problems arising during the
closing process. The Makaronets Real Estate Law Firm can provide sound legal advice on how
to proceed if:
- property improvements are restricted by heritage designations
- the home is located in a flood zone or an area that’s prone to wildfires
- the legal survey and property boundaries don’t agree
- the property title has a lien against it
- the seller isn’t the legal owner of the property
For more information about how we can help with an Assignment of Property, contact the
Makaronets Real Estate Law Firm today .
