Condo Reassignment Question

[jackiechandc]

Hi everyone,
I was wondering what everyone`s opinion is on a possible condo assignment.
I have a potential sell, who bought a condo in Toronto. They bought two units but due to change in financial situations can only afford one now. They want to sell at cost for what they bought it for plus the cost of assignment, lawyer fees, etc... They just want to get out of the deal even. This is quite fair as the building is pretty much sold out and the builder is asking for $40,000 more for a similar unit.
The problem is the builder is not going to let reassignment till next year as they are still selling units.
The sales office suggested the only way around it is to use a lawyer to draft out an agreement. All my payments will be made to the lawyer in a trust account. Once the builder allows reassignment (most likely next year), the payments will go to the seller in exchange for the assignment of the condo unit.
I was wondering if anyone has had any experience in a situation like this and does this make sense. Any advice would be most appreciated. Take care.
Wei

 

[TommyK]

I have done an assignment before where I sold my unit to another party. It was a smooth transaction as I got the approval from the builder BEFORE I started to advertise.

In your case, even though your seller wants to get out of the contract, he/she cannot legally assign it to you without builder`s approval. I would think twice about giving the deposit to a lawyer as the timing is uncertain.

What if the builder wouldn`t allow assignment? Then your deposit just sits in the trust account for a year? It`s a wasted opportunity if you ask me.

If I were you, I would hold and wait. I would tell the seller that I am very interested but I can`t take over the assignment without builder`s approval. The seller needs to either get the builder to approve for next year.. a date? a conditional letter? etc.

There`s always a risk in trying to assign a pre-sale contract. Builder has the absolute decision.

Hope this helps.
Tommy

 

[jackiechandc]

Hi Tommy,
Thanks for the reply and advice. The builder is holding firm on not allow reassignment till next year as they are releasing new units. This is a tough call, because the units are selling about $40-$50K more then what the seller is asking for. I figured it would be great to get it below market value as the real estate market is getting tougher, so this way I can have a cushion for any upcoming corrections by the time the building is complete.
I figured that if I buy another new build, my money would be locked up anyways for a couple of years. The only person that would have this risk would be the seller as the builder can claim breach of contract and take the deposit and the condo away.
This is a tough call. I also bought another unit from assigment from another seller a while back, but they had the builder`s permission. Gonna have to think this one out Take care.
Wei