Purchasing a Property via an Assignment?By Kormans LLP
In this blog post, we will cover a few aspects of purchasing a pre-construction property via an Assignment and why is it vital to have a lawyer who is well versed in Assignments represent you with regards to same.
Buying a pre-construction property directly from a Developer/Builder is complicated enough on its own. However, another dimension of impediments is added when one decides to purchase a pre-construction property via an Assignment.
For those of you who are unfamiliar with the concept, an Assignment of an Agreement of Purchase and Sale with a Builder (APS) is when the existing Purchaser of the said contract decides to sell their right to purchase the subject property to a potential new Buyer.
In such scenarios the Developer/Builder is referred to as the Vendor; the existing Buyer is referred to as the Assignor; and the potential new Buyer is referred to as the Assignee.
The first hurdle is to come to terms with the Assignor with regards to purchasing their APS with the Builder. It is strongly recommended that any offer to purchase such agreements be conditional on solicitor review by the Assignee’s solicitor.
A prudent solicitor will ensure that amongst other things the Assignee is not taking on unnecessary liabilities of the Assignor as part of purchasing the APS.
In addition, it is also vital to ensure that the deposits that the Assignor has claimed to pay in the Assignment APS correlate with the deposit schedule that is part of the original APS with the Vendor.
It is important to note that the Assignment APS is also conditional on obtaining the consent of the Vendor, who as part of consenting to the Assignment reserves the right to charge an Assignment fees along with any applicable legal fees. One of the terms in the Assignment APS Schedule should cover as to who shall be responsible for the payment of such fees, which in most cases is the Assignor.
For professional legal advice on other imperative aspects of an Assignment purchase such as the HST rebate eligibility; the residency status of the Assignor; and the occupation of the property prior to completion of the Assignment, please contact one of our lawyers via email and/or telephone and we would be more than happy to assist you!
Also, be on the lookout for a future blog post which shall cover crucial issues to consider in an Assignment transaction from the perspective of an Assignor.
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