Key takeaways
- The assignor transfers an existing contractual position; the assignee takes on the purchase under the agreed assignment terms.
- Builder consent, restrictions and fees may affect whether the assignment can proceed.
- The assignment price, deposit reimbursement and final amount payable to the builder are different figures.
- GST/HST, income tax, land transfer tax and rebate eligibility require separate analysis.
Who is the assignor, and who is the assignee?
The assignor is the original buyer under the purchase agreement. The assignee is the person taking over the contractual position. The builder or original seller remains the party who must ultimately transfer the property under the underlying agreement. [1]
An assignment is common in pre-construction transactions, but the label alone does not tell you what is being transferred. Read the original agreement together with the assignment and any consent documents.
The incoming buyer should understand the agreement they are assuming, including amendments, deposits, deadlines, adjustment clauses and any default that has already occurred. A favourable headline price can be misleading if the underlying obligations are expensive or uncertain.
Can a buyer freely assign the agreement?
Do not assume so. The original agreement may prohibit assignment, permit it only with written consent or impose conditions and fees. There may also be restrictions on advertising the assignment. Your lawyer must check the actual wording before you market or sign anything. [1]
If consent is required, clarify who obtains it, who pays the charges and what happens if it is refused or delayed. An assignment agreement signed between two buyers cannot force the builder to give a consent it has not promised to provide.
For an outgoing buyer, consent to the assignment is not necessarily a release from every continuing obligation. Ask whether the documents expressly release you or leave you responsible if the incoming buyer later fails to close.
How do the money and deposits work?
There are normally several amounts to separate:
- The original purchase price and balance still payable under the builder agreement.
- Deposits already paid to the builder, with proof of those payments.
- Any reimbursement of those deposits by the assignee.
- The agreed assignment payment, which may reflect a premium or discount.
- HST, consent charges and other transaction costs.
For example, a builder price of $700,000 with $100,000 already deposited leaves a different funding problem from a simple $700,000 resale. The incoming buyer may need money for a deposit reimbursement and assignment payment before their purchase mortgage is available.
Have your lawyer document where each amount is held, when it is released and what happens if the assignment or final purchase does not complete. Do not rely on an informal receipt or an assumption that a mortgage lender will finance every component.
Is HST payable on the assignment?
Assignment sales involving newly constructed or substantially renovated residential housing made on or after May 7, 2022 are generally taxable for GST/HST purposes. That can apply even if the original buyer intended to live in the home and later changed plans. [2]
Where the assignment agreement identifies in writing an amount attributable to reimbursement of the original deposit, the legislation provides specific treatment excluding that amount from the assignment consideration for this purpose. The rest of the calculation and collection obligations still require care. [3]
Ask whether the negotiated assignment amount includes HST or whether HST is additional, who must collect and remit it, and whether special rules apply to a non-resident assignor. Tax on the builder’s ultimate sale is another part of the transaction.
What about income tax and housing rebates?
The outgoing buyer’s profit is not automatically a tax-free principal-residence gain. Business-income principles and the residential-property flipping rules can apply to a right to acquire a property. A loss should not be assumed deductible either. Obtain transaction-specific tax advice before agreeing on a net return. [4]
The incoming buyer must also reassess any new-housing or first-time-buyer rebate. The assignment payment, purchaser circumstances and dates can change the result. For Ontario’s temporary enhanced new-housing rebate, both the original agreement and assignment generally need to fall within the April 1, 2026 to March 31, 2027 window. [5]
Land transfer tax and any foreign-buyer taxes need their own calculation. Do not assume the builder’s original rebate estimate or the assignor’s tax position carries over to you.
What should each side do before signing?
Use your own lawyer and obtain the complete original agreement, amendments, deposit evidence, disclosure package and consent requirements. The incoming buyer should confirm financing for both the assignment payments and final closing. The outgoing buyer should confirm the circumstances in which they remain liable.
Make the agreement address the practical failure points: refused consent, missed deposits, delayed occupancy, changes in price or adjustments, and a purchaser unable to close. An assignment can work well, but it needs a fully costed and documented plan.
About the author — Kubeskaran Navaratnam
Kubeskaran Navaratnam is the Managing Partner of iClosed and a lawyer licensed by the Law Society of Ontario (LSO #60539H, licensed since 2011). His practice is Ontario residential real estate, acting for buyers, sellers and lenders on resale, new-build and condominium closings across the Greater Toronto Area. His Law Society record can be verified at https://lsodirectory.lso.ca/en-US/licensee-detail/?lawsocietynumber=60539H. This article is general information about Ontario law and practice, not legal advice. It does not create a lawyer-client relationship. For advice on your own transaction, speak with a licensed Ontario real estate lawyer.
Sources
- CRA — Assignment of a purchase and sale agreement for a new house or condominium unit GI-120. — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/gi-120/assignment-a-purchase-sale-agreement-a-new-house-condominium-unit.html
- CRA — GST/HST information for the home construction industry RC4052. — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4052/rc4052-gst-hst-information-home-construction-industry.html
- CRA — GST/HST treatment of assignment sales Notice 323. — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/notice323/proposed-gst-hst-treatment-assignment-sales.html
- CRA — Principal residence and residential property flipping rules. — https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html
- CRA — Ontario Enhanced New Housing Rebate Notice 346. — https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/notice346/ontario-enhanced-new-housing-rebate.html
This article provides general information about Ontario law and closing practice as of October 26, 2026. It is not legal or tax advice and does not create a lawyer-client relationship. Your agreement of purchase and sale, your lender’s instructions and your own circumstances control what applies to you. Rates, thresholds and rules change — confirm current figures before relying on them.