What Is an Assignment in British Columbia Real Estate?

If you're exploring the real estate market in British Columbia, you may have come across the term "assignment of contract" or simply an "assignment." While it might sound like legal jargon, it’s actually a common practice in the real estate world—especially in pre-sale (new construction) property transactions. Understanding what an assignment is can help you navigate your options as a buyer, seller, or investor.

What Is an Assignment?

In BC real estate, an assignment refers to the process where the original buyer of a property (the "assignor") sells their rights and obligations under the original purchase contract to another buyer (the "assignee") before the property is completed or ownership is transferred.

This typically happens in pre-sale transactions, where someone buys a property from a developer before it's built and later decides to "assign" that purchase to someone else before the final completion date.

Example

Let’s say Sarah buys a condo from a developer that’s scheduled for completion in two years. A year later, she decides she no longer wants the property—maybe her life circumstances have changed, or she wants to cash out her investment. She finds another buyer, James, who agrees to take over the contract. Through an assignment, James steps into Sarah’s shoes, takes over the contract, and will complete the purchase when the condo is ready.

Key Points to Know

1. Developer or Seller Consent Is Often Required

Most assignment clauses in contracts require the developer’s written consent before an assignment can occur. Some developers may also charge an assignment fee.

2. Assignments Are Legal—but Regulated

Assignments are legal in BC, but they’ve been subject to increased scrutiny and regulation, especially after concerns about speculation and transparency. In 2016, BC introduced new rules requiring disclosure of assignment terms and profits.

3. Tax Implications

Profits made from an assignment sale may be subject to income tax or capital gains tax, and in some cases, GST may apply. Buyers and sellers should consult with a tax professional to understand their obligations.

4. Assignment vs. Resale

An assignment is not the same as reselling a completed property. In an assignment, the original buyer never takes ownership—the contract is sold before the title is transferred. In a resale, the owner already holds the title and sells the property like any standard transaction.

5. Market Risk

Since assignments are often done before completion, the market can change significantly. If property values fall, the assignee may be paying more than the current market value. If values rise, the assignor might profit from the appreciation.

Why Do People Use Assignments?

• Flexibility: Life changes—assignments offer a way out if you no longer want or need the property.

• Profit: Investors may assign contracts at a higher price if property values have increased.

• Access: Buyers may get access to sold-out developments by taking over someone else’s contract.

Final Thoughts

Assignments can be a valuable tool in BC’s real estate landscape, offering both opportunities and risks. Whether you’re looking to assign your contract or purchase one, it’s crucial to understand the legal and financial implications. Always work with a licensed real estate professional and consider getting legal advice to ensure the process goes smoothly.