gradient box – do not remove it
An assignment sale lets a buyer in Ontario sell their right to buy a pre-construction home before the deal closes. The original buyer (the assignor) transfers their agreement with the builder to a new buyer (the assignee), who then closes with the builder. Before anyone signs, a lawyer checks whether the builder allows the assignment, how the deposits and profit are paid, the GST/HST and income tax that may apply, and the title and closing details. Property Law Firm is a residential real estate law firm with an office in Oakville, and assignments are one of the transaction types we help with.
An assignment can look like a resale from the outside, but the paperwork runs differently. The new buyer steps into a contract signed years earlier with a developer, along with every condition, fee and deadline in it.
How Ontario Assignments Work
Parties, Consent, and Deposits
Three parties are involved. The assignor is the original buyer who signed with the builder. The assignee is the new buyer taking over the contract. The builder still has to deliver the home. The original agreement of purchase and sale (APS) sets out each party’s rights, so it controls nearly every step that follows.
Start with the assignment clause in the builder’s APS. Some agreements prohibit assignment outright. Others allow it only with the builder’s written consent, and many add an administrative fee and conditions, such as a ban on listing the unit on MLS. If you assign without the required consent, the assignor can end up in default under the original contract.
Deposits are the second moving part. The assignee normally reimburses the assignor for the deposits already paid to the builder, and usually pays a separate amount for the assignor’s profit, often in stages. The assignment agreement should set out each amount and when it is paid. If you’re unsure how a deposit differs from the rest of the money you’ll need, our explainer on the differences between a deposit and a down payment covers the basics.
Taxes and Final Closing
Taxes are where an assignment differs most from a resale.
Income tax for the assignor. Under the federal residential property flipping rule, profit from assigning the right to buy a residential property within 12 months is generally treated as business income, unless a life-event exemption applies. Outside that window, whether the profit is business income or a capital gain depends on the facts, so the assignor should speak with an accountant.
GST/HST on the assignment. Since May 7, 2022, assignment sales of newly built homes are taxable. CRA’s guidance on assigning a new home contract says the tax applies to the full amount paid for the assignment, including the amount that reimburses the assignor’s deposit. The assignee may still qualify for the GST/HST new housing rebate if they meet the eligibility rules, and can include the tax paid on the assignment in that claim.
Land transfer tax for the assignee. The assignee pays land transfer tax at final closing. Eligible buyers can claim Ontario’s first-time buyer refund of up to $4,000, and buyers in Toronto can also claim the city’s rebate.
| Item | Who it affects | When it arises |
| Builder consent fee | Usually the assignor | Before the assignment is finalized |
| Income tax on profit | Assignor | Year of the assignment |
| GST/HST on the assignment amount | Assignor charges it to the assignee | On assignment of a newly built home |
| GST/HST new housing rebate | Assignee, if eligible | At or after final closing |
| Land transfer tax | Assignee | Final closing |
On timing, the assignee closes directly with the builder, not with the assignor. In condominium projects, this usually happens after a period of interim occupancy. Title is then transferred through Ontario’s electronic land registration system, where only authorized users such as lawyers can submit documents through Teraview.
What Your Lawyer Reviews
Contract and Title Checks
Your lawyer reads the original APS, every amendment, the builder’s consent and the assignment agreement side by side. The goal is to catch clauses buyers often miss, such as caps on development charges, adjustments for utility hookups, and how much flexibility the builder has on occupancy dates.
Warranty status is another check. Ontario new home builders must be licensed by the Home Construction Regulatory Authority, which you can confirm in the Ontario Builder Directory, and new homes must be enrolled with Tarion. Your lawyer confirms the project is properly registered and that the assignee receives the warranty protections that apply to delayed closings and deposits.
For a condo assignment, the lawyer also reviews the condominium documents, and once the building is registered, the status certificate, which shows the corporation’s finances and any special assessments. Our guide to a status certificate’s role in a condo purchase explains what to look for.
The title search looks for liens, easements and executions against the parties. Title insurance is often recommended, especially when the builder’s documents are complex.
Closing and Choosing Counsel
As closing approaches, your lawyer prepares the statement of adjustments, coordinates mortgage funds with the lender, and handles the electronic registration. When documents are turned around quickly and conditions are confirmed early, agents and brokers can firm up deals faster and avoid last-minute extensions.
Whether you are in Oakville or elsewhere in the province, check the lawyer’s practising status in the Law Society of Ontario directory. Then ask:
- Have you handled assignment closings, and how often?
- Is your fee fixed, and which disbursements are separate?
- Is title insurance included in the quote?
- How long do you take to review an assignment agreement?
- Can I sign documents online or remotely?
For more on the legal side of a closing, see what a conveyancing lawyer does in Ontario.
The Bottom Line
An assignment adds builder, tax and timing steps to an ordinary closing. A lawyer who reviews the documents before anyone signs protects both sides: the assignor avoids tax surprises and default risk, and the assignee knows exactly what they’re taking on. Bring in a lawyer as soon as an assignment is proposed, so the agreement can be reviewed before deposits change hands.
Buying or selling an assignment in Ontario? Property Law Firm can review the assignment agreement and give you a clear fee quote before you commit. Request a quote or visit our Ontario page to get started.
Frequently Asked Questions
Do I need builder consent for an assignment?
Usually, yes. Most pre-construction agreements require the builder’s written consent and charge a fee for it, which is why your lawyer reviews this clause first.
Is HST charged on an assignment sale?
For newly built homes, yes. Since May 7, 2022, GST/HST applies to the full assignment amount, including the part that repays the original deposit. An eligible assignee may be able to recover some of it through the new housing rebate.
Who pays land transfer tax on an assignment?
The assignee pays it at final closing. Eligible first-time buyers can claim the Ontario refund, and in Toronto they can also claim the municipal rebate.
What should I ask a lawyer before hiring?
Confirm their Law Society of Ontario licensing and ask about their experience with assignments. Find out what the fixed fee covers, which disbursements are extra, whether title insurance is included, and whether they offer online signing.
This article is for general informational purposes only. It does not constitute legal or tax advice and does not create a lawyer-client relationship. Tax rules and rebates are subject to change; confirm your situation with your lawyer and accountant. This content is intended to comply with the Law Society of Ontario’s Rules of Professional Conduct, Rule 4.2.
