Tuesday, February 15, 2011

Assignment of Agreements of Purchase and Sale

This article below talks about assignment of an agreement and is much more
common with condominiums in our current marketplace.

Assignment of Agreements of Purchase and Sale

An Assignment of an agreement of purchase and sale is not the transfer or
assignment of real property but rather an assignment or transfer of rights
arising out of the agreement or contract relating to
real property.

Assignments have become increasingly more common in the condominium sector.
However, in all builder contracts there is a restriction on the right of the
initial buyer to assign the agreement
of purchase or sale or contract without the builder's consent. Builders will
charge the buyer a fee for the consent to assign the contract to a new or
subsequent buyer.

When the agreement is assigned to the second buyer, this buyer will be
subject to both the benefits and obligations arising under the agreement
unless otherwise provided in the assignment agreement between the initial
buyer (the assignor) and the second/subsequent buyer (the assignee). As an
example, unless otherwise agreed to between the assignor and the assignee in
their assignment agreement, the assignee will receive the benefit of the
interest the builder credits the buyer on the deposits paid to the builder
as well as incur the expense of paying builder's closing costs such as the
Tarion Warranty premium, utility meters and connections and development
charges and educational levies.

We have provided the following checklist of issues to be considered when
preparing an assignment of agreement of purchase and sale:

1. Obtain a copy of the builder's agreement of purchase and sale;

2. What form of assignment agreement to be used;

3. What is the original purchase price;

4. What is the new purchase price

5. The amount of builder deposits already paid by the assignor; are
these deposits included in new purchase price or in addition to the purchase
price as a reimbursement to the assignor (the builder will provide a credit
for these deposits to the assignee on the final statement of adjustments)

6. What is the deposit amount on the assignment transaction and who
will hold the deposit - the agent/broker, the assignor's lawyer etc.

7. status of construction and closing dates - interim occupancy and
final closing dates;

8. the anticipated possession by the assignee - pre/post interim
closing date

9. the amount of the occupancy payment

10. postdated cheques for occupancy payments and other adjustments

11. the cost to obtain builder's consent and status of obtaining such

12. who pays for the consent

13. builder's form of assumption/assignment agreement

14. who is paying the builder's closing costs

15. who is receiving credit for interest on the assignor's deposits
already paid to the builder

16. How is payment of purchase price made - amount down, any amount paid
prior to possession, amount paid upon the builder's consent being obtained;
amount paid on final closing etc.

17. Other Issues - Non-residency/withholding taxes - Assignor; GST/HST;
Tarion registration by Assignor; Capital Gains Tax - Assignor

For a copy of our pro forma assignment agreement and our annotated
assignment agreement, please email us at service@shapirocho.com or go to our
website at www.shapirocho.com.

I hope this finds you Happy and Healthy!

All the Best!


A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987
BUS 905-828-3434
FAX 905-828-2829 CELL 416-520-1577

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