An assignment in Canada is the transfer of contractual rights and obligations from one party (the assignor) to another (the assignee) before a contract is fully executed.
While this term can refer to various legal transfers, it is most commonly used in Canadian real estate regarding pre-construction condos or homes.
1. Real Estate Assignment Sales (Pre-Construction)
The original buyer sells their interest in the contract.
In a real estate assignment, the original buyer (the assignor) sells their interest in a pre-construction purchase agreement to a new buyer (the assignee) before the builder officially closes the sale.
- How it works: the assignee takes over the contract and will complete the final closing with the builder.
- Why people assign: investors may sell for profit (the “lift”) before closing, or original buyers may need to exit due to financing issues or life changes.
- Builder approval: most developers require written consent for an assignment.
- Costs & taxes: assignment sales are complex and often subject to HST (Harmonized Sales Tax) on the profit, as well as potential assignment fees paid to the builder.
- Deposits: the assignee typically pays the assignor the deposit they already paid to the builder, plus any profit.
2. Legal Context
Assignment vs. novation.
An assignment only transfers the rights (benefits) of a contract.
To transfer both rights and obligations — completely moving the assignor out of the contract — a process called novation is required, which needs the consent of all parties.
3. Other Types of Assignments
Assignments aren't just for pre-construction.
- Lease assignment: a tenant (the assignor) transfers their entire tenancy agreement to a new tenant (the assignee). Unlike subletting, the original tenant is generally not responsible for the lease after the assignment is completed.
Key Things to Know
Before you buy — or sell — an assignment.
- Risks: if the new buyer (assignee) fails to close the deal with the builder, the original buyer (assignor) may still be liable to the developer.
- Restrictions: some builders restrict or prohibit assignments, or charge high fees for them.
- Location matters: assignment rules can vary by province — for example, in British Columbia the BCFSA provides specific guidelines for assignments.
