Presale Condo Assignment of Contract and Purchase and Sale BC
It’s essential that you know your options with your presale condo assignment and how to handle them safely.
According to the Real Estate Council of British Columbia, an assignment is defined as follows:
“A contract assignment occurs when a buyer transfers the contract to buy property to someone else before the completion date. The buyer can transfer the contract for any price, even for a higher price than they paid for the property.” In theory, the new buyer is buying a “resale” of a previous “presale.” Hence, the coined term “presale resale.”
There are three parties involved in a presale assignment transaction.
The buyer who entered into the contract with the developer is the “original buyer.” The purchaser under the assignment contract will be the “new buyer,” and the developer who is building the development and contracted with the original buyer will be referred to as the “developer.”
They require consent from either the seller or the developer (often the developer). This can occur in resale and presale homes; however, assignments are most commonly found in presales with a more extended closing, often five years away.
When can I assign a home and what are the restrictions?
You will have to refer to the original contract of purchase and sale to determine whether or not you can assign the home.
Assigning the right to purchase
The following must occur to ensure an assignment of a purchase agreement complies with the requirements under the Real Estate Development Marketing Act and Regulation:
The developer must consent to the assignment.
- The developer must collect and report comprehensive information on the assignment and input it into the “Condo and Strata Assignment Integrity Register” (CSAIR)
- The Condo and Strata Assignment Integrity Register (CSAIR) is a database for assignments of purchase agreements of all residential condo and strata lots in B.C., including both pre-sale lots and completed lots.
- You must report any profit made on your income tax return, which will be checked against the information in the CSAIR.
- The final purchaser of the unit pays a property transfer tax on the total amount paid, including any upgrades, at the time of registration with the land title office.
Property transfer tax
Purchasers pay property transfer tax on the total amount paid to acquire the property. The property tax payment occurs when the title to the unit is registered at the land title office.
Why do assignments occur?
Assignments often occur when a presale has significantly appreciated value before completion. The current buyer would like to take the appreciation (often called a “lift”) while it’s up and assign it to another buyer.
Are assignments legal?
Yes. Real estate contracts are assignable under the law unless the contract expressly forbids it.