What are assignments when it comes to real estate?
We are here to answer all of your questions. You may have heard of assignments a lot this year, as they have been getting a bit of a bad rap lately. It’s important that you understand what an assignment is in order to make the best and most informed decision about real estate for yourself.
First and foremost let’s begin with the definition of an Assignment:
- “An assignment is when a purchaser and a seller enter into a firm and binding contract that assigns the sale to another buyer before the completion date of the initial sale.”
- Directly from BCREA – ” “Assignment” is the practice of someone assigning their rights in a contract to someone else before the transaction completes. In simple terms, someone can buy the right to step into the original buyer’s shoes to complete the contract. Assigning one’s right to a contract is a legitimate practice, allowed by common law and also by section 36 of the Law and Equity Act.”
The BC government has introduced new legislation to put a stop to some of the abusive practices that have gone on with assignments. These new clauses are to protect the seller and stipulate the sale can’t be assigned without the written consent of the original seller and any profits realized by an assigned sale would go to the original seller. Here are the clauses:
- This contract must not be assigned without the written consent of the seller; and
- The seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.
Things to Know about assignments (from our previous post)
Assignment Fee: A developer will usually charge a fee called ‘Assignment Fee’. This will be in your original contract and/or the disclosure statement. So, if you know you may want to assign your condo make sure to know if they are permitted by the developer and be aware of what they will charge.
Marketing: Some developers may not allow your assignment to be marketed to avoid competing with them. Be sure to check if you can advertise on Social Media, MLS and other websites. If not, this may be more of a challenge for you to sell and something you should know before firming up on the original buy.
The Lift: Be aware that some buyers may not have all the money for you right away. Often, we have to break up the lift into several payments over time; even some at completion. It is up to you to negotiate and decide what works. Not everyone in Vancouver has $225,000 in cash lying around!
The Contract: When someone (assignee) buys your investment, the contract is very complex. Make sure you have someone experienced in assignments as things can be very complicated! Working with a professional who has experience with assignments will allow you to get the most out of the sale and avoid overlooking any key points in the contract.
For further information about the real estate market in Vancouver and current trends, contact Top Vancouver Realtor Leo Wilk.