6 Important Facts To Consider When Selling A Preconstruction Condo.

Updated: August 2026

There are many reasons why someone might sell a preconstruction condo before it’s complete, but there’s a right and a wrong way to go about it. Selling a preconstruction condo is very different from selling a home you’ve actually lived in. In the industry, this is called an assignment, because you’re selling your contract to purchase the home, not the home itself.

That makes it more complicated than a traditional resale. You’re negotiating payable taxes, development levies, deposit structure, purchase price, and the date the new buyer takes over the contract,  all while working within rules set by the builder.

Here are six things every seller should understand before assigning a preconstruction condo.

 

1. Why People Sell Assignments in the First Place

Preconstruction condos, by nature, attract a lot of speculative investors. In recent years, many of the buildings we’ve sold saw up to 75% of pre-con sales going to investors instead of end-users. Some of these investors plan on holding the property after it’s closed, but many of these investors were just speculating on appreciation, and they have no intention on becoming landlords. These investors buy preconstruction properties, especially ones with favourable deposit schedules, and they assign their condo in 3-4 years when prices have climbed. ,

Sometimes we help end-users who brought preconstruction condos, and then had a change of circumstances when the building was finally finished. Although, most assignments we handle are owned by investors who were looking to make a profit in real estate without ever having a mortgage, or worrying about a tenant.

 

2. Who Actually Buys Assignments

Years of tight resale inventory, especially in high-demand luxury buildings, have pushed some buyers toward the assignment market instead. The catch: assignment purchases require significantly more capital than a typical resale.

Regardless if you’re buying in an appreciating or depreciating market, assignments take a lot of capital to buy. Let’s explore further:

Appreciating market: Say you purchased a condo for $800,000 and want to resell it for $1m, giving you a clean profit of $200,000. 

The buyer must have the funds to pay back your $160,000 deposit.

The further $200,000 profit is another critical payment t to worry about. Without a new appraisal from a lender for an appraised value of $1m, the buyers would need to provide that further $200,000 out of their pocket.

The closing costs are also hard costs that must be paid out of pocket, so the buyers would have to pay land transfer taxes (on the $1m), plus development levies, and builder nickel and dime charges.

 

Depreciating Market: Say you purchased a condo for $1m and want to resell for $900,000, giving you a loss of $100,000. 

The buyer will owe you back $60,000 in deposits (even though you paid $160,000 in deposits). This is where the loss is felt.

The buyer must then navigate the mortgage situation. In a depreciating market, the banks are very stingy on appraisal values, so the buyer might only get a mortgage approval for $850,000.

The bank will give the buyer a mortgage for 80% of that $850,000 (s0 $680,000)

That means the buyer of the property must still make up another $160,000 to close + closing fees. ($680,000 + 60,000=$740,000.00- 900,000=$-160,000.00)

 

Another major concern for buyers of assignments is the timeline between purchase and final closing date. While most assignments take place in the final months before occupancy, the time from occupancy till final closing can take anywhere from 4-12 months. 12+ months of waiting till closing is dangerous for buyers who are on the cusp of affording a mortgage. If they were squeezing into the sale by the skin of their teeth, a good realtor would likely talk them out of it.

Important: You don’t want a buyer who is struggling to make ends meet to buy your assignment condo. In the instance that the buyer cannot close, the developer will look to you to close instead. That clause is part of a standard assignment agreement that you’ll be signing with the developer and the buyer after negotiating a firm offer. If both you and the buyer default on the purchase, you could both be sued for damages.

 

3. You’re Also Competing With the Builder

At times, it can feel like the developer doesn’t want you to assign your unit because of how hard they make the process. That’s by design. The developer usually has unsold inventory (or they have units that won’t close, which they will need to sell after closing). If they allow you to sell your assignment condo, it means taking a potential buyer off the market for a unit the developer might need to sell at the same time, or at a later date.

Because of that, developers usually impose restrictions on your sale like:

• Marketing restrictions. You typically can’t publicly list an assignment the way you would a resale home. That means you can’t post it on MLS, or on public forums like FB marketplace. The buyer needs to come from your agent’s network.
• A short assignment window. Builders decide when and how you can market your assignment. Most builders only allow them for a short period of time, usually after the roof is complete, but before the building takes occupancy.
• An assignment fee. Developers usually charge assignment fees. Even developers who don’t charge a straight “assignment fee” they will charge a different hidden charge for the service like a “builder’s lawyer fee” and a “assignment review fee”. Almost no assignments are actually 100% free.

 

4. Assignment Sales Are Taxed Differently

This is one of the most overlooked parts of an assignment sale, and it can significantly change your bottom line.

• HST/GST may apply to some or all of the profit on an assignment sale.
• Your profit may be treated as business income rather than a capital gain, particularly if the CRA views your original purchase as speculative rather than as a home you intended to live in. Business income is taxed at your full marginal rate, versus only 50% of a capital gain being taxable.
• The original deposit might be taxed when it’s returned to you.

Because the rules here are constantly changing, and everyone’s situation is a little different, it’s really important to get advice from your accountant.

 

5. Contractual Surprises & Hidden Costs

Builder contracts are not standard contracts. Something we’ve seen more and more in recent years is the inability to transfer important caps or incentives on to a new buyer in an assignment sale.

Just last year we had a client who purchased a condo at Nuvo in Oakville (with another agent) come to us to assign their unit. However, the 1 parking spot and 1 locker included in the original sale are not transferrable to the new buyer. Since no one lives in North-West Oakville without a car, the unit would be a very difficult sale without a parking spot.

That was a new one for us, but something we’ve been dealing with for years is the disappearance of caps on fees in an assignment. The biggest one is the development levy. Development levies are fees charged by the city to build a unit. The developer goes to the city and gets a quote, and any cost above that quote is charged back to the buyers. Smart buyers will have a cap on these fees, so they cannot get excessive (we have heard of some development levies hitting $50,000). However, some developers have started making development levy caps non transferrable, so they can grab more money from the buyer.

Buyer’s agents will re-negotiate a development levy cap into the contract. However, since the original agreement of purchase and sale cannot be re-negotiated, they will be looking to you as the seller to cover any fees above the original cap.

 

6. Understand the Timing and Financing Risks

A few risks that catch sellers off guard:

• You can miss your assignment window. If the builder is slow to approve the sale, or you list too close to the closing date, you may run out of time to assign at all.
• Buyers can fail to close, and if they do not close, you’re liable to close in their place.
• Interim occupancy fees. If your assignment happens during the interim occupancy period (common with condos), clarify upfront who is responsible for occupancy fees in the meantime
• Choosing Finishes. One of the biggest incentives for buyers when purchasing an assignment is the right to choose their own finishings. Try not to choose finishes, but, if you have a conditional offer on your property at the same the the finishes must be chosen, discuss the situation with your agent and lawyer. Do not choose finishes without speaking to your agent and lawyer.