Buying preconstruction - Assignment

[rbt]

Is there any way around buying off a seller if the builder doesn't allow assignment!?!? I am really interested in a place, but the deal could not go through and I want to know if it's because the builder doesn't allow assignments and if so, if there is absolutely anything else I can do.

Contracts, all contracts, by default are assignable unless there is an explicit statement in the contract which prevents it.

I guess the short answer is to read your agreement (they are all different and use different wording, even clients in the same building will often have slightly different contracts) with a lawyer and see what you can do.

You might (depending on the wording around tenants) be able to sell today with title transferred in the future.

That means you buyer moves in as tenant, you close with the builder and a few seconds later your buyer/tenant closes with you. If setup correctly you can close using your buyers money. Lots of extra government fees for doing this as title will briefly be in your name.

 

[DTK]

did you ask if you can append a name to the purchase? If so, you can remove the name of the other person at closing.

Actually, maybe I should clarify... Someone (an agent) invested in her own place and she told me that she could append my name to the purchase and remove hers at closing, exactly as stated above. But according to her, the sales manager at Concord would not allow her to do that and the deal went dead...

From my knowledge, adding/appending names can be done during the 10 day cooling period, with no charge attached to it. After the 10 day cooling period, then an assignment would have to be done.

Also, I heard that even with an assignment clause and the associated fees attached with it, at the end of the day, it is up to the builder and they have the final say in whether or not they permit the assignment. True or not?

 

[rbt]

Also, I heard that even with an assignment clause and the associated fees attached with it, at the end of the day, it is up to the builder and they have the final say in whether or not they permit the assignment. True or not?

If there are no clauses as to assignment, then the seller has absolutely no say.

Contracts, by default, are sellable without notifying the other party. You're mortgage contract has probably been sold a half dozen times and you didn't even receive notification (banks sell a communication service to maintain themselves as a communications gateway).

However, that 30 page contract developers have you sign has restrictions to assignment. Each one is different so you need a lawyer to interpret what it actually says.

If the builder says they get to approve of the new buyer, then they get to approve of them. If they don't say that, then they don't get that ability.

 

[MadMax]

I'm not sure if this has been answered previously...anyways, if you already have a principle residence and you decide to sell an assignment before taking title of the unit, is the seller subject to any captial gains taxes on the sold unit? In other words, is it considered an investment property and therefore you would have to pay tax on the sale at the end of the year? Is there any way of getting around this, if it is the case?

Thanks...

 

[Yossi Kaplan MBA]

tax

I'm not sure if this has been answered previously...anyways, if you already have a principle residence and you decide to sell an assignment before taking title of the unit, is the seller subject to any captial gains taxes on the sold unit? In other words, is it considered an investment property and therefore you would have to pay tax on the sale at the end of the year? Is there any way of getting around this, if it is the case?

Thanks...

believe you'll have to pay cap gains on the appreciation, check w your accountant.

 

[Yossi Kaplan MBA]

title

That means you buyer moves in as tenant, you close with the builder and a few seconds later your buyer/tenant closes with you. If setup correctly you can close using your buyers money. Lots of extra government fees for doing this as title will briefly be in your name.

in the method above you will have to face 2 closings: first original buyer has to close with the builder, then, new buyer has to close with original buyer. means original buyer has to absorb high closing costs + occupancy fees and both pay land transfer tax when applicable.

financially that is the least desired outcome since it is inefficient (ie you are spending a lot of money to do something you cold have done for much less).

easiest method is to get builder's approval, which will cost you from $500 to $5,000 + GST.

other option is to ask your lawyer if they could redirect title at closing.

 

[rbt]

in the method above you will have to face 2 closings

That's exactly what I said: "Lots of extra government fees for doing this as title will briefly be in your name."

easiest method is to get builder's approval, which will cost you from $500 to $5,000 + GST.

Which they said in the original post that the builder WILL NOT APPROVE of.

 

[simuls]

I'm not sure if this has been answered previously...anyways, if you already have a principle residence and you decide to sell an assignment before taking title of the unit, is the seller subject to any captial gains taxes on the sold unit? In other words, is it considered an investment property and therefore you would have to pay tax on the sale at the end of the year? Is there any way of getting around this, if it is the case?

Thanks...

No way to get around it. Any property that has not be OWNED (meaning you have title - interim occupancy does not count) and lived in for a minimum of 1 year is subject to capital gains tax. All assignments are in this category.

 

[cdr108]

I'm not sure if this has been answered previously...anyways, if you already have a principle residence and you decide to sell an assignment before taking title of the unit, is the seller subject to any captial gains taxes on the sold unit? In other words, is it considered an investment property and therefore you would have to pay tax on the sale at the end of the year? Is there any way of getting around this, if it is the case?

Thanks...

you made money, you pay taxes ... what's the big deal?

alternatively, take possession and pay occupancy fees for an unspecified time; wait for the place to register and pay mortgage, closing fees, property taxes, etc for at least 1 year to qualify as principal residence; then take your chances that the value has increased/remained the same and pay additional fees to discharge your mortgage early when you sell.

 

[MadMax]

you made money, you pay taxes ... what's the big deal?

alternatively, take possession and pay occupancy fees for an unspecified time; wait for the place to register and pay mortgage, closing fees, property taxes, etc for at least 1 year to qualify as principal residence; then take your chances that the value has increased/remained the same and pay additional fees to discharge your mortgage early when you sell.

Are you sure you have to live in your place for a whole year in order for it to qualify as your principle residence? I didn't think that was the case any more...

 

[bornandbredinto]

Residing in the unit for 1 year is not the litmus test. It's all based on intention. If it was your home for 1 month and something unforeseen happenned, then so be it, it's still considered your principal residence and exempt from capital gains. The only catch is that you may only claim one residence per year as your principal residence.

 

[cdr108]

Residing in the unit for 1 year is not the litmus test. It's all based on intention. If it was your home for 1 month and something unforeseen happenned, then so be it, it's still considered your principal residence and exempt from capital gains. The only catch is that you may only claim one residence per year as your principal residence.

if that is the case, and someone bought pre-construction as Mad Max was asking, then you're saying it's CG exempt?

are you an accountant, just asking?

 

[sam13]

hi,
i have an assignment.
i am willing to sell for cost plus my interest(carrying charges)..i am not looking at profits...as per the builder the price has gone up by about $30,000
please give me a private message if interested..

http://www.tridel.com/solaris/p2/2a_suite.php

thanks
sam

 

[newbuyer]

if you are selling the unit not for profit then you should sell it with the price that you got not per the builder's price which has gone up by $30k. LOL

 

[AKS]

I think the person is saying you're saving 30k because builder's price has gone up and the seller is selling at cost+interest. However I think that will be offset by HST the buyer has to pay depending on the price of the unit.