Key Takeaways
- 1An assignment sale hands the original buyer's contract to you before the building closes, so you buy the right to the unit, not the unit itself.
- 2Many builder agreements require written consent before an assignment, and some builders charge a fee, so check the agreement before you agree on a price.
- 3The CRA says that since May 7, 2022, all assignment sales of newly built homes and condos are taxable for GST/HST, so ask your lawyer what applies to your deal.
- 4A lender may value the unit at closing for less than the total you paid, and any gap comes from your own savings.
- 5In the made-up example, a $650,000 total cost against a $620,000 valuation means you cover $14,000 of the closing balance yourself.
- 6Ask a licensed broker to check the paperwork and the lender's rules before you sign the assignment agreement, not after.
An assignment sale is when the original buyer of a pre-construction condo sells their contract to a new buyer before the building closes. A mortgage on one is often possible, but it comes with extra checks, because the lender has to look at two agreements and a price that can be higher or lower than the original.
Assignment sales are a regular part of Toronto's condo market, and the financing questions usually come up late, after the buyer has already agreed on a price. This guide explains what lenders may look at, walks through a clearly labelled made-up example, and lists five steps to take before you sign.
Quick answer: Yes, you can often get a mortgage on an assignment sale in Ontario, but you arrange it for the closing date, not for today. Lenders may ask to see the builder's original agreement, the assignment agreement, and the builder's written consent. They also check what the unit is worth when you close, which can be lower than what you paid. Approval depends on your income, credit, down payment, the lender's rules, and the paperwork, and a licensed mortgage broker can review all of it before you commit.
Below, you'll find how an assignment sale works, what lenders may check, a worked example, the costs to ask about, and five steps to take before you sign.
Key Takeaways
- An assignment sale hands the original buyer's contract to you before the building closes, so you buy the right to the unit, not the unit itself.
- Many builder agreements require written consent before an assignment, and some builders charge a fee, so check the agreement before you agree on a price.
- The CRA says that since May 7, 2022, all assignment sales of newly built homes and condos are taxable for GST/HST, so ask your lawyer what applies to your deal.
- A lender may value the unit at closing for less than the total you paid, and any gap comes from your own savings.
- In the made-up example below, a $650,000 total cost against a $620,000 valuation means you cover $14,000 of the closing balance yourself.
- Ask a licensed broker to check the paperwork and the lender's rules before you sign the assignment agreement, not after.
How an Assignment Sale Works in Toronto
An assignment sale works by passing the original buyer's agreement with the builder to a new buyer before the building closes. You step into that agreement, and the builder is still the one who delivers the unit.
Definition moment: An assignment sale (when the original buyer of a pre-construction condo sells their contract to a new buyer before closing) transfers the right to buy the unit, not the unit itself, because the original buyer does not own it yet.
Many builder agreements require written consent before an assignment is valid, and some builders charge a fee for it. Going ahead without a required consent may breach the original agreement, so ask a real estate lawyer to read the assignment clause first.
You also take over the existing agreement, so you inherit its closing dates and conditions. The Condominium Authority of Ontario explains that the Statement of Critical Dates lists when the builder expects to finish the unit and the latest dates it can be pushed back to, so read it before you commit.
Who | Role in the sale | What to check |
|---|---|---|
Original buyer | Sells the contract and asks the builder for consent | What they want to be paid, and whether the builder has agreed |
You, the new buyer | Pay the original buyer, then close with the builder | Your total cost and your financing |
The builder | Gives or refuses consent, may charge a fee, and delivers the unit | The assignment clause and any fee |
The lender | Decides whether to finance the balance at closing | Its paperwork list and how it values the unit |
Bottom line: An assignment sale changes who is buying, not how the building is delivered, so the builder's agreement still sets the dates and the rules.
To see how the original purchase works, read our guide to pre-construction condo deposits in Toronto.
Can You Get a Mortgage on an Assignment Sale?
A mortgage on an assignment sale is possible when a lender is comfortable with the paperwork and with the unit's value at closing. You arrange it for the closing date, which can be months or years away, so the lender looks at your finances again when that date gets close.
Lenders differ, so ask yours for its list early. Here are documents you may be asked for:
- The builder's original agreement and its Statement of Critical Dates.
- The signed assignment agreement, showing what you are paying the original buyer.
- The builder's written consent, if the agreement requires it.
- Proof of the money you paid, and where it came from.
- Your usual income, credit, and debt documents.
Definition moment: An appraisal (a professional opinion of what the unit is worth) is one way a lender checks value, and it can come in lower than the price you agreed to pay.
That matters because the total you pay in an assignment sale is often higher than the builder's original price. A lender may lend against the lower of what you paid or what the unit is valued at, so anything paid above that value may need to come from your savings.
What the lender may check | Why it matters | What you can do |
|---|---|---|
The paperwork | It shows what you are buying and from whom | Send every document to your broker before you sign |
Value at closing | The mortgage may be based on value, not on price | Ask how the lender values an assignment |
Your finances at closing | Approval is checked again near the closing date | Keep your income, credit, and debts steady |
Where your money came from | Lenders ask about the source of a down payment | Keep a statement for every payment |
The closing date | A delay can end an approval before you close | Ask how long the approval stays open |
Bottom line: A lender needs to be comfortable with the paperwork, your finances, and the unit's value, and each of those can change before closing.
If you are unsure how approvals work, our guide to pre-approval versus pre-qualification is a good place to start.
A Worked Example With Made-Up Numbers
Example only: these are round, made-up numbers to show the method. They are not real prices, builder terms, or lender limits, and your own results will be different.
Definition moment: A premium (the extra amount the original buyer asks for on top of getting their deposits back) is what makes an assignment price higher than the builder's original price.
Step | Example calculation | Example result |
|---|---|---|
1. Builder's original price | Set in the original agreement | $600,000 |
2. Deposits already paid | The original buyer paid the builder | $90,000 |
3. Premium | The extra the original buyer asks for | $50,000 |
4. You pay the original buyer | $90,000 plus $50,000 | $140,000 |
5. You still owe the builder at closing | $600,000 minus $90,000 | $510,000 |
6. Your total cost | $140,000 plus $510,000 | $650,000 |
7. Lender's made-up value at closing | From the lender's valuation | $620,000 |
8. Gap the lender does not count | $650,000 minus $620,000 | $30,000 |
9. Made-up lending limit | 80% of $620,000 | $496,000 |
10. Your own cash needed at closing | $510,000 minus $496,000 | $14,000, plus closing costs and taxes |
In this example, the lender values the unit at $30,000 less than you paid, so the mortgage covers $496,000 of the $510,000 owed at closing. You cover the remaining $14,000 yourself, on top of the $140,000 you paid the original buyer.
The 80% limit is invented to keep the maths simple. Real limits depend on the lender, your down payment, and whether the mortgage is insured, and the example leaves out taxes and fees.
Bottom line: The price you agree to pay and the value a lender sees can be different, and your savings cover the difference. You can test your own numbers in our purchase calculator, and read how CMHC mortgage insurance works if your down payment is smaller.
Costs and Taxes to Ask About Before You Sign
Assignment sales come with costs beyond the price you agree on, and the amounts depend on your deal. Ask about each of these before you commit.
- The builder's fee. Some builders charge a fee to approve the sale, and it is set by the agreement or the builder's policy.
GST/HST. The Canada Revenue Agency says all assignment sales of newly built or substantially renovated homes have been taxable since May 7, 2022, and that tax can apply to the full price, including a deposit the original buyer paid.
The CRA also says the new buyer generally pays the tax to the builder for the home and to the original buyer for their interest in it. Ask your lawyer who pays what in your deal, because the answer changes your total cost.
Land transfer tax. It is paid when you close, and the value it is based on may include what you paid the original buyer. Our guide to the Ontario land transfer tax shows how it works.
- Legal fees. Your lawyer reviews the original agreement and the assignment agreement.
Other closing costs. These are the same as for any new home, and our closing costs guide lists them.
Bottom line: Add the fees and taxes to the price before you decide, because they can change whether the numbers work.
5 Steps to Take Before You Sign an Assignment Agreement
Preparing for an assignment sale works best as a checklist you finish before you sign, not after. Here are five steps, in order.
- Read the builder's assignment clause. Ask for the original agreement and the builder's rules on consent and fees.
- Ask a broker to check financing first. A licensed mortgage broker can ask lenders how they treat assignment sales and estimate what you may qualify for before you agree on a price.
- Work out your total cost. Add what you pay the original buyer, the balance owed to the builder, taxes, and fees, then compare it with what a lender may value the unit at.
- Have your real estate lawyer review both agreements. Make sure consent, closing dates, and how Tarion's deposit protection and warranty apply to you are clear.
- Plan for the closing date. Ask how long an approval stays open and what happens if the date moves.
For the lawyer's question on deposits, Tarion's deposit protection page is a useful starting point.
What Toronto and GTA Buyers Should Know
Assignment sales are a regular part of Toronto's condo market, because buyers' plans can change during the years a building takes to finish. Each builder handles them differently, so what works for one project may not work for another.
Whether the project is in North York, Scarborough, Richmond Hill, Pickering, or Ajax, the builder's agreement controls the rules. Buyers in Ottawa follow the same Ontario rules with different builders.
You are also buying into a building that is not running yet, so it helps to read how condo fees affect your mortgage before you decide.
Bottom line: Compare the builder's rules and the lender's rules together, because both have to say yes.
5 Mistakes to Avoid With an Assignment Sale
These mistakes are common, and each one can be avoided with a little planning.
- Agreeing on a price before checking financing. A lender may value the unit below what you agreed to pay, and the gap comes from your savings. Check the financing first.
- Ignoring the builder's consent. Many agreements require it, and going ahead without it may breach the original agreement. Confirm it in writing.
- Forgetting taxes and fees. GST/HST, land transfer tax, legal fees, and any builder fee can add up well beyond the price.
- Assuming the closing date is yours. You take over the original agreement's dates. Ask how a delay would affect your approval.
- Skipping the lawyer. Two agreements are involved, and one small clause can change who is responsible if something goes wrong.
Useful Resources for Ontario Condo Buyers
If you are new to buying, our first-time home buyer guide for Toronto covers the full process.
Ready to check an assignment? Visit our mortgage pre-approval page or talk to a licensed Ontario mortgage broker.
Frequently Asked Questions: Assignment Sale Mortgages
Can you get a mortgage on an assignment sale in Ontario?
Often, yes, but it is arranged for the closing date, and the lender checks your finances and the unit's value again when that date is near. Lenders may ask for the original agreement, the assignment agreement, and the builder's consent. Approval depends on your income, credit, down payment, and the lender's rules, so ask a licensed broker to review the paperwork before you agree on a price.
What documents might a lender ask for on an assignment sale?
Lenders differ, but you may be asked for the builder's original agreement, the signed assignment agreement, the builder's written consent, and proof of the money you paid and where it came from. You will also share your usual income, credit, and debt documents. Ask your lender or broker for the exact list early, since missing papers are an easy way to lose time.
Do I need the builder's consent to buy an assignment?
Many builder agreements require written consent before an assignment is valid, and some builders charge a fee for it. Going ahead without a required consent may breach the original agreement. Your real estate lawyer can read the assignment clause and confirm what applies, including how Tarion's protections apply to you, before you sign anything or pay any money. Ask the builder for its fee in writing too.
Is HST charged on an assignment sale?
The Canada Revenue Agency says all assignment sales of newly built or substantially renovated homes have been taxable for GST/HST since May 7, 2022. The CRA adds that the tax can apply to the full price, including a deposit the original buyer paid. Who pays what depends on your deal, so confirm the details with your real estate lawyer or an accountant.
What should I do if the lender values the unit below the price I paid?
Talk to your broker as early as you can, because the mortgage may be based on the lower value and the gap would come from your savings. Your broker can check how other lenders treat assignments and what each would offer. No outcome is certain, so plan your cash for the closing balance and the gap before you commit to the price.
Should I use a mortgage broker for an assignment sale?
A broker can ask lenders how they treat assignment sales, check your paperwork, and estimate what you may qualify for before you agree on a price. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763), and its licensed professionals can review the assignment agreement and your finances together, which is easier than fixing a gap after you have signed.
Disclaimer
This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).
Ready to Check the Financing on an Assignment?
lendsimpl's licensed Ontario mortgage professionals can review the paperwork, your income, and your savings before you commit, and show what to plan for at closing. Approval depends on your income, credit, down payment, and each lender's rules.
FSRA-licensed brokerage #13763
Frequently Asked Questions
Often, yes, but it is arranged for the closing date. Lenders may ask for the original agreement, the assignment agreement, and the builder's consent. Approval depends on your income, credit, down payment, and the lender's rules.
You may be asked for the builder's original agreement, the signed assignment agreement, the builder's written consent, and proof of the money you paid. Lenders differ, so ask for the exact list early.
Many builder agreements require written consent, and some builders charge a fee. Going ahead without a required consent may breach the original agreement. Ask your real estate lawyer to read the assignment clause first.
The CRA says all assignment sales of newly built or substantially renovated homes have been taxable for GST/HST since May 7, 2022. Who pays what depends on your deal, so confirm it with your lawyer or an accountant.
Talk to your broker early. The mortgage may be based on the lower value, and the gap would come from your savings. Your broker can check how other lenders treat assignments, but no outcome is certain.
A broker can ask lenders how they treat assignment sales and check your paperwork before you agree on a price. lendsimpl is a licensed Ontario mortgage brokerage (FSRA #13763), and its professionals can review the agreement and your finances together.
Popular Scenarios
Sources
Disclaimer:This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).
