Can I Sell My Pre-construction Condo?
The short answer is: Maybe. You can sell your agreement through an assignment sale, provided you are permitted to do so by the developer. But this is a complex question, so let me explain a bit more.
For starters, when you bought your pre-construction condo, you entered an agreement to purchase the condo before or during its construction. If you are considering selling it, I would highly encourage you to seek the counsel of a lawyer who is insured to practice real estate law.
As many pre-construction condo buyers may be able to attest, a lot can happen between the time you sign an agreement and the moment you take possession and officially own the new unit. For instance, there could be construction delays. Or the developer could cancel the project altogether.
Whatever the reason might be, if you have had a change of heart and would like to sell the condo before taking possession, you can do that through an assignment sale — which is essentially when you sell your agreement.
There must be a provision in your agreement that allows you to do this, and sometimes it comes with a fee or the stipulation that the developer has the first right to buy it back. Check with your lawyer to examine the wording in the agreement.
As the original buyer, during an assignment you are transferring your rights and obligations under the agreement to purchase a pre-construction condominium to another buyer. The new buyer will take your place under the terms of agreement, including all the rights and obligations as they are detailed in the original agreement with the developer.
By agreeing to the assignment, a new buyer will be purchasing your agreement to complete the final sale with the developer. It becomes an agreement between you and the new buyer, which also has terms.
If you are wondering, why not just sell your unit to a new buyer directly, it is because you not permitted to do that, and here’s why. You do not own the condo unit until it is built, you have closed on the purchase, and ownership has officially been transferred to your name.
Something else to bear in mind is that even if the transaction is permitted by the developer, it can be challenging to find another buyer because of potential restrictions on how the unit can be marketed, prohibitions on listing the property publicly on the multiple listing service (MLS) or other platform, or associated fees required to get permission. There is also the issue of the developer trying to sell other similar units.
That is why I suggest that you consider working with a real estate agent who is knowledgeable and experienced with assignment sale transactions. You can ask them questions to help you better understand your options, weigh out the pros and cons, and make an informed decision about whether a pre-construction sale is something you would truly like to pursue. Your agent can also review your existing agreement and confirm whether it includes the relevant terms to allow the sale by assignment.
Article Courtesy of Joseph Richer, Registrar RECO
Photo Credit Tolu Olubode