I bought a condominium unit, pre-construction. My financial circumstances have changed significantly and I now need to sell it. What should I know?
Just so we are all talking about the same thing, entering an agreement to purchase a pre-construction condo is when you contractually commit to buy a condo before or during its construction — but you would not move in until it is complete, or sufficiently complete to do so.
This is a very tricky topic and I urge you, initially, to consult a real estate lawyer about it.
As many pre-construction condo buyers know, many things can happen between the time you buy and the time you take possession and own it. From the builder’s perspective, there may be construction delays and sometimes projects are cancelled. Buyers face different risks and all of the research in the world cannot protect a buyer from an unanticipated change in personal circumstances.
If you are at the point where you are thinking of trying to sell the condo before you take possession, you are most likely embarking on what is referred to as an assignment. This is when the original buyer assigns their rights and obligations under the contract to purchase a pre-construction condominium unit, or suite, to another buyer. The new buyer will take their place under the contract, including all of 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 the original purchaser’s (your) agreement to complete the final sale with the developer.
You may be wondering why the need for an assignment and why not just sell the unit or suite to the new buyer directly. In short, you don’t own it until the condo unit is built, you have closed on the purchase and ownership has formally transferred to your name.
In addition to consulting with a salesperson or broker familiar with assignment sale transactions to advise you about your options, I again strongly recommend that you also consult with your real estate lawyer. He or she can review your existing agreement and confirm that it includes the appropriate clauses necessary to permit the sale by assignment, or that it does not expressly prohibit it.
Even if the transaction is permitted by the builder, you may have difficulty finding another buyer because there may be restrictions on how the unit can be marketed, prohibitions from listing the property publicly on the multiple listing service (“MLS”) or there may be associated fees in order to have permission granted.
It is extremely important to work with someone knowledgeable and experienced so that you understand the benefits and the risks. real estate salesperson or broker who specializes in pre-construction purchases, or has experience with this type of sale, can help you evaluate the options, weigh the pros and cons and determine if a pre-construction sale — or purchase — is right for you.
If you have a question for Joe about the home buying or selling process, please email email@example.com.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.