Assignment Sales Explained: Selling (or Buying) Before Closing

An assignment sale happens when the original buyer on a pre-construction agreement (the assignor) sells their rights and obligations under that agreement to a new buyer (the assignee) before the building closes. The assignee effectively steps into the assignor's shoes and closes directly with the builder.

Builder consent is almost always required

Most pre-construction agreements restrict assignment until the builder consents — and many require an assignment fee, some retain a right of first refusal, and some don't permit assignment at all until a certain point (often after occupancy begins or a minimum percentage of the building has sold). Read your specific agreement's assignment clause before assuming you can sell before closing at all.

Marketing restrictions are common

Many builders prohibit publicly listing an assignment on MLS or advertising the building's name and address until they've consented — deals are often marketed more quietly as a result. This is worth planning for if your exit strategy depends on selling before closing.

How assignment profit is taxed

Since May 7, 2022, the sale of an assignment on newly constructed or substantially renovated housing is generally subject to GST/HST on the full assignment sale price, with narrow exceptions (for example, assignments driven by specific life circumstances like a death in the family or a relationship breakdown, where no one who originally entered the agreement intended to resell). Separately, profit from an assignment is typically treated as fully taxable business income rather than a capital gain, given the short holding period involved — this is general information, not tax advice, and you should confirm treatment with an accountant before you rely on it.

Where these deals fall apart

• The assignor assumes the builder will consent, and finds out late that they won't (or that the fee is higher than expected).
• The assignee needs mortgage financing and discovers lenders treat assignment purchases differently than resale purchases.
• Occupancy fees and deposits owed to date aren't clearly reconciled between assignor and assignee in the assignment agreement itself.

None of this makes assignment sales a bad strategy — they're a normal, common part of the pre-construction market. It just means the paperwork and timing matter more than in a typical resale, and it's worth having both a real estate lawyer and Andy review the specific project's assignment clause before you commit to a plan that depends on it.