If you're somewhat familiar with real estate, then you must have heard of the term "assignments". But, do you know what that term means in the real estate world (No, they're not what your teacher assigns you in school).
An assignment is a transaction between the assignor (the original buyer of the property) and the assignee (the new buyer of the property). The assignor and assignee enter a contract in which the assignee will take over the rights & obligations of the contract of purchase and sale. All this happens before the completion date of the intial sale.
This is a legal, and legitimate practice in real estate.
Despite this being a legal practice, the RECBC has developed requirements that must be followed to avoid abuse of assignment contracts. These requirements include:
- The contract must not be assigned without the written consent of the original seller
- The seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee
Important Assignment Terms To Know
Lift: The lift is the balance of the assignment amount (Typically a positive number because property values appreciate over time). Essentially, it's what the assignor is getting paid by selling this assignment to the assignee.
Assignment Fee: The developer commonly charges an assignment fee. This can be found in your original contract. You should also be aware that you may need developer approval before being able to assign your property.
In conclusion, selling an assignment can be confusing, and is quite different from selling a regular property. This is why it's important to do your research before!
As always, feel free to contact us if you're interested in buying/selling an assignment! We are here to help make your real estate journey as smooth as possible!