What is pre-construction assignment

A pre-construction assignment, commonly referred to as a condo assignment or pre-sale assignment, is a transaction wherein an individual who has purchased a pre-construction property, typically a condominium unit, opts to sell their purchase agreement—effectively “assigning” the rights and responsibilities outlined in the original agreement to a new buyer before the property’s construction is finalized and officially registered.

Here is a detailed breakdown of how this process typically unfolds:

1. Original Buyer:
   • This is the individual who initially enters into a purchase agreement with the developer for the acquisition of a pre-construction property. The original buyer is also known as the “assignor.”
2. Assignor:
   • The original buyer, or assignor, makes the decision to transfer or assign their rights to the property to a new buyer before the construction reaches completion.
3. New Buyer:
   • The individual who purchases the rights to the pre-construction property from the original buyer is referred to as the “assignee” or the new buyer.
4. Developer’s Approval:
   • In many instances, the developer’s consent is required for the assignment to proceed. The developer may charge a fee to cover the administrative costs associated with processing the necessary paperwork.
5. Profit or Loss:
   • The original buyer may experience either a profit or a loss depending on the change in the property’s market value since they initially signed the purchase agreement. If the market has appreciated, the original buyer stands to make a profit; conversely, a decline in the market may result in a loss.

Pre-construction assignments present an opportunity for the original buyer to divest their interest in the property prior to taking possession. Simultaneously, for the new buyer, it represents a chance to acquire a property that is still under construction. To navigate this process successfully, it is crucial for both parties to have a comprehensive understanding of the terms and conditions stipulated in the original purchase agreement, be aware of the developer’s policies regarding assignments, and consider any associated costs or fees that may arise throughout the assignment process.