Ultimate Guide to Presale Condo Assignment Sales in BC

Selling a presale condo in British Columbia through an assignment sale can be a great way to manage changing circumstances or even realize a profit before the property is completed. However, the process involves various considerations, including legal, financial, and developer-specific requirements. Here's a comprehensive FAQ to guide you through presale condo assignments in BC.

What is a Presale Condo Assignment?

A presale condo assignment is a legal transaction where the original buyer of a presale condo transfers their purchase rights and obligations to another buyer before the property's construction is complete.

Why Sell a Presale Condo Through Assignment?

People choose to sell presale condos for reasons such as:

• Financial changes

• Shifts in housing needs

• Opportunities for profit due to market appreciation

Are All Developers Open to Assignments?

No. While some developers allow assignments, others prohibit them or impose strict conditions. Policies may even change after written permission is granted, so having your Realtor verify the developer's assignment terms is crucial.

What Are the Tax Implications of Selling an Assignment?

The tax treatment of assignments can be complex due to evolving GST rules. It's recommended to consult a qualified tax professional to understand your liabilities, including potential capital gains taxes.

Can Developers Change Their Minds About Assignments?

Yes, developers can revoke assignment permissions at any time. Reasons might include concerns over marketing or prioritizing direct sales of remaining units.

What Are Developer Marketing Restrictions?

To protect their brand, developers often restrict how assignments can be marketed. This may include:

• Prohibiting MLS listings

• Limiting public promotions on websites or social media

How Is the Value of an Assignment Determined?

The value of an assignment is influenced by:

• Comparable sales within the development or nearby properties

• Current real estate market conditions

• Developer-imposed marketing restrictions

If MLS marketing is allowed and comparable sales exist, determining value becomes simpler.

What Happens After the Assignment Agreement is Signed?

Once the agreement is signed:

• The assignor’s deposits held by the developer are transferred to the assignee.

• Assignment fees are paid, typically by the assignee.

• The assignor may receive reimbursement for deposits and any profit agreed upon.

Do Developers Charge Assignment Fees?

Yes, developers charge assignment fees, typically ranging from 1% to 5% of the property value. Family transfers often have lower fees, around $500.

What Are the Risks of Selling an Assignment?

Risks include:

• Market fluctuations affecting the property’s value

• Legal and tax complexities

• Potential issues with developer policies

Consult a real estate professional, tax expert, and lawyer to mitigate risks.

Required Legal Documents for Presale Condo Assignments in BC

Selling a presale condo assignment requires:

• The original purchase agreement

• The assignment contract

• Developer consent forms

Working with an experienced Realtor can simplify this process.

Marketing Restrictions in Vancouver and BC

Marketing limitations often prohibit public MLS listings and require adherence to developer-specific branding and promotional guidelines.

How Does the Assignment Process Impact the Original Buyer’s Deposit?

The assignor’s deposit is transferred to the assignee upon developer approval. The specifics depend on the terms of the agreement.

Can International Buyers Buy or Sell Assignments in BC?

Due to the Foreign Buyers Ban (effective until 2025) and the 20% Foreign Buyers Tax, international buyers face significant restrictions. However, foreign owners of presale condos can assign them, though their market presence is minimal due to these regulations.

Common Misconceptions About Assignments

Some believe assignments are simpler than traditional sales or always profitable. In reality, they involve legal complexities and market risks that require expert guidance.

How Do Market Conditions Affect Assignments?

Market trends significantly impact the value of assignments. Supply, demand, and broader economic factors determine whether assignments are profitable.

Role of Developers in the Assignment Process

Developers oversee the assignment process, set policies, and approve or reject requests. They also determine assignment fees and restrictions.

Setting the Right Price for an Assignment

To price your assignment effectively:

• Conduct a market analysis

• Consider developer restrictions

• Review comparable sales data with a Realtor specializing in presale assignments

How Much Are Assignment Fees?

Fees typically range from 1% to 5% of the property value, but in rare cases, they can be higher. Unscrupulous developers may demand excessive fees—up to 50% of the profit in extreme cases.

When Is Selling at a Profit Viable?

To cover costs and generate profit, the property usually needs to appreciate by at least 20% over the original purchase price.

Can You Sell an Assignment at a Loss?

While developers often prohibit selling at a loss, it’s possible under specific conditions. Consult a Realtor to explore your options.

Who Regulates Presale Condo Assignments in BC?

The British Columbia Financial Services Authority (BCFSA) oversees presale condo assignments, along with local real estate boards that regulate Realtor conduct.

Start Your Presale Condo Assignment Journey

Selling a presale condo assignment in BC is a complex but rewarding process when done correctly. Uzair and his team specialize in presale condo assignments and can guide you through every step, ensuring a seamless and successful transaction.

Contact Uzair today to learn more about your options for selling a presale condo assignment!