Bought early in a Midtown pre-construction and wondering if you should sell your contract before closing? You are not alone. Many early buyers in Yonge-Eglinton consider an assignment to lock in gains, sidestep carrying costs, or pivot as plans change. This guide explains how assignments work in Midtown, the risks to watch, realistic timelines, and what can drive your returns so you can move with confidence. Let’s dive in.
What an assignment is in Midtown
An assignment is the transfer of your rights and obligations in a pre-construction purchase agreement to a new buyer before the condo registers and title transfers. The new buyer steps into your shoes and closes with the builder at occupancy or registration. In Yonge-Eglinton, assignments are common because new launches are frequent and demand from investors and end users has been strong historically.
Assignments are different from a normal resale. A resale happens after registration when title exists and the unit can be listed on the open market like any other condo. An assignment is about selling the contract itself, not a registered unit.
Why investors use assignments
- You can shorten the holding period versus waiting for occupancy and final closing.
- If the market has appreciated since your purchase, you may realize a profit sooner.
- You may avoid interim occupancy fees and other carrying costs that occur between occupancy and registration.
Builder consent and the mechanics
Most builder agreements in Toronto require written consent before an assignment is valid. Builders use this to vet the assignee, update records, and confirm deposits. Always check your original purchase agreement for the exact rules and timing.
Typical documents and timing
Builders usually ask for identification, proof of funds or financing, completed purchaser information forms, and signed assignment paperwork. Consent can take a few business days to several weeks. If deposits need to be topped up or multiple approvals are involved, it can take longer. The contract language governs how and when consent can be refused.
Fees and who pays what
Builders often charge an assignment or administration fee when they grant consent. In practice, ranges commonly fall around 0.5% to 2% of the purchase price, and tax may apply. Who pays the fee is negotiable. Make sure your assignment agreement clearly allocates fees, legal costs, and any tax obligations.
Deposits, financing, and occupancy
The original deposit schedule stays in place. The assignee may provide a deposit to you or to the builder, including any top-up required by the vendor. If the assignee needs a mortgage, builders often want conditional approvals and proof of the ability to close.
Interim occupancy occurs before registration. Understand how occupancy fees are calculated and who pays them under your assignment agreement. Final closing adjustments such as property taxes and condo fees are settled at registration.
Taxes and closing costs overview
Tax treatment depends on individual facts and intent. Speak with a real estate tax professional for tailored advice and consult Canada Revenue Agency materials for current guidance.
Income tax or capital gain
Assignment profits can be taxed as business income or as a capital gain. Factors like frequency of flips, how you marketed the deal, and holding period matter. The classification affects your effective tax rate, so get advice before you transact.
GST/HST on assignments
Assignments of pre-construction contracts often involve GST/HST considerations. Whether tax applies to only the builder price, only your profit, or both depends on the structure and whether you are making a commercial supply. Builders may structure closings differently, so involve a tax advisor early.
Land transfer tax in Toronto
The assignee who takes title at registration typically pays Ontario Land Transfer Tax and the City of Toronto Municipal Land Transfer Tax at closing. In practice, LTT is calculated on the price paid by the purchaser who takes title. Your lawyer will confirm calculations in the closing statement.
Foreign-buyer rules and financing
Federal and provincial policies that affect non-resident buyers can impact eligibility and demand. Rules have changed several times in recent years, so confirm current policies and financing criteria before you proceed.
Market liquidity in Yonge-Eglinton
Midtown’s Yonge-Eglinton node has a steady pipeline of condo projects and historically strong rental and end-user demand due to transit access, retail and office presence, and its established neighborhood profile. Liquidity for assignments shifts with the market cycle.
What drives demand and speed
- Pricing versus nearby resale comparables at the time of marketing.
- Overall buyer sentiment and interest rates that affect mortgage affordability.
- Supply from new launches that compete on price and amenities.
- Any buyer restrictions that narrow the pool of eligible assignees.
Timelines and return drivers
- You might list an assignment months or years after your original purchase, depending on builder stage and market conditions.
- Builder consent can be quick, but your proceeds usually come at the builder’s closing when the condo registers.
- Returns hinge on appreciation since your purchase, minus fees, taxes, legal costs, and any carrying costs.
Key risk scenarios to plan for
- Builder refuses consent under the contract or charges a higher-than-expected administration fee.
- Market softens, compressing your margin or pushing pricing near your original purchase price.
- Lending conditions tighten, which can reduce the number of qualified assignees.
- Policy or tax changes that affect non-resident buyers or the GST/HST treatment.
- Construction delays that push out closing and add interim costs.
Due diligence checklists
For assignors in Midtown
- Confirm your assignment clause, any blackout periods, and consent rules in the original agreement.
- Obtain the builder’s assignment policy in writing, including fee, document list, and timeline.
- Have a lawyer review the assignment agreement, especially deposit handling and indemnities.
- Seek tax advice on business income versus capital gain, plus any GST/HST exposure.
- Estimate net proceeds after builder fees, legal fees, commissions, and taxes.
- Confirm any outstanding conditions such as upgrades or deposit top-ups that might affect closing.
For assignees in Midtown
- Request the full original purchase agreement, all schedules, deposit history, and amendments.
- Review the builder consent form in advance and confirm required documents.
- Arrange mortgage pre-approval that reflects final closing terms and interim occupancy.
- Ask a lawyer to review deposit protection, allocation of adjustments, occupancy timing, and warranty retention.
- Obtain a breakdown of expected interim occupancy fees and who pays them.
- Seek tax advice on GST/HST and land transfer tax exposure and future resale implications.
Sample assignment timeline
- Day 0: You list the assignment and negotiate terms with a buyer.
- Days 1 to 21: Parties sign the assignment agreement. Assignee pursues financing. Builder consent is requested.
- Days 7 to 42: Builder processes consent. Deposits are transferred to trust per the agreements.
- Post-consent to registration: Construction continues. Final closing occurs at registration or occupancy according to the builder schedule. This is often 1 to 4 or more years after the original purchase.
Deal tips to protect your outcome
- Use a lawyer who regularly handles assignments and require written builder consent before releasing funds.
- Make your assignment conditional on builder consent to protect all parties.
- Negotiate responsibility for builder fees, legal costs, and any tax obligations, then document the allocation clearly.
- For assignors, confirm how and when deposits are released or transferred, and only per the purchase agreement.
When an assignment makes sense
Consider an assignment if the market has moved in your favor, if you want liquidity before occupancy, or if upcoming carrying costs do not fit your plan. If you prefer to capture rental income or wait for a more favorable resale environment after registration, holding to close may be better. Review comparables, your tax profile, and your builder’s policies before you decide. A clear plan and precise paperwork will protect both price and timeline.
If you want a discreet evaluation of your Midtown assignment options and access to qualified buyers, connect with the team at Penthouse Queen. Our founder-led approach, developer relationships, and global reach help you move with clarity and control.
FAQs
Builder consent for assignments in Midtown Toronto
- Most builder agreements require written consent before an assignment is valid, and consent can take days to weeks depending on documents and deposits.
Typical assignment fees in Toronto projects
- Builders commonly charge an assignment or administration fee that in practice often ranges around 0.5% to 2% of the purchase price, and tax may apply.
HST on assignment profit in Ontario
- GST/HST can apply to assignments depending on your facts and structure, so involve a real estate tax professional to determine obligations.
Land transfer tax on assigned condos in Toronto
- The assignee who takes title at registration typically pays Ontario LTT and Toronto municipal LTT based on the price at closing, confirmed by your lawyer.
Timeline to receive assignment proceeds
- Proceeds are usually received at the builder’s closing when the condo registers or at occupancy, unless your agreement is structured differently.
Financing for an assigned pre-construction purchase
- Lenders assess assigned purchases under their policies, so the assignee should secure pre-approval that reflects final closing terms and interim occupancy.
