Selling a Pre-Construction Property via an Assignment?By Kormans LLP
In one of our recent blogs we had outlined some issues in relation to purchasing a property via an Assignment. http://www.kormans.ca/purchasing-a-property-via-an-assignment/
In this blog post, we will cover a few aspects of selling a pre-construction property via an Assignment and why it is crucial to have a lawyer who is well versed in Assignments represent you with regards to same.
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 original Buyer of the said APS decides to sell their right to purchase the subject property from the Builder to a potential new Buyer.
In such scenarios the Builder is referred to as the Seller; the original Buyer is referred to as the Assignor; and the potential new Buyer is referred to as the Assignee.
Often it can take a few years for a pre-construction property to be ready for occupancy from the time when the original Buyer signed the APS. Life circumstances for a Buyer may change in this timespan such as relocation due to a job, family planning; financial constraints, or they just don’t feel comfortable in proceeding with the transaction any longer.
While in a position such as this it would be ideal to just snap your fingers and wish yourself out of the situation, unfortunately the APS signed with the Builder at this point is a firm deal and the Buyer is contractually bound.
An Assignment of the APS to an Assignee is an ideal solution in such circumstances and as a bonus can often even result in the Assignor making some profit by selling their APS to an Assignee.
However, the right to assign the APS is not automatic. At the very least it is contingent on the consent of the Builder. To ensure the right to assign is included in your pre-construction APS, it is very essential that you have the APS reviewed by a lawyer within the ‘cooling off’ period if the property is a condominium, or during a conditional period in the APS. http://www.kormans.ca/pre-construction-contracts-why-it-is-essential-for-a-lawyer-to-review/
The Assignor and the Assignee sign a contract between themselves outlining the terms related to the Assignment. Some of the key items covered in this contract include but are not limited to the price, deposit structure, possession of the property if the Occupancy Closing has already taken place, additional representations and warranties, tax issues, and more.
For professional legal advice on detailed aspects of an Assignment sale, please contact one of our lawyers via email and/or telephone and we would be more than happy to assist you! http://www.kormans.ca/about/
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