Sellers Guide: Assignment Clauses and Sales

As you may have heard, the Windsor real estate market is currently hot and a hot topic at that as well. Windsor homes are hitting record high selling prices. If you are thinking of selling, almost every Windsor REALTOR ® will tell you it is a great time to do so, with more people than ever looking for homes for sale in Windsor, Ontario. But seller beware!

Just when we thought we were safe, assignments could make a comeback in the Windsor, Ontario real estate market..⁠ If you are selling your house and not paying attention, that buyer could end up profiting from increasing prices before you even legally transfer ownership of the home.⁠ So be vigilant because you don't want someone else profiting off of your sale.⁠

If you think back a few years ago, you may recall a controversy over the practice called "shadow flipping". That was back at the peak of our last market cycle and the media pointed out the somewhat shady practice where properties were flipped for a quick buck, and rightly so! "Shadow flipping" (or using assignments) allowed these buyers to avoid paying the very hefty Property Transfer Tax, not to mention possibly even capital gains tax. This “shadow flipping” was seen as contributing to an already overheated market., much like where the market sits today. There was talk of banning assignments, however assignments can still have their time and place in real estate transactions. But, and it's a big but, significant restrictions were placed on them and the process of using them. Today, they now require disclosure as well as the agreement of the seller.⁠

Now with the market hot again, it's possible we start seeing assignment clauses (and assignment sales) coming back into the real estate world and you should know how they work. There are 2 parts to this permission:⁠ First is giving the right to to the seller to assign the contract to another party. Second, giving your rights to the profit of this assignment to the buyer.⁠ Under very specific circumstances, there isn’t an overwhelming reason to stand in the way of a buyer asking for permission to assign. They can be a useful and necessary means for a buyer to fulfill their obligation under the contract and stubbornly refusing to allow an assignment you may find yourself without a sale at all.⁠

So why would a buyer legitimately want to assign their contract? One reason is they may want to add a spouse, parent or other family member. Conversely, they may wish to remove a spouse, parent or other family member.⁠

Here is our advice on the topic. Pay attention to the specific wording of the contract, not just what the buyer verbally relays to you. Only allow an assignment clause if it's specific who can be added/removed from a contract⁠. Seek the advice of a legal professional, they’ll be able to speak better to the legality and wording of the contract. ⁠Lastly, never, ever, give up your rights to the profits of an assignment.⁠

Here at Jump Realty, no matter how they pronounce a street name, our agents will give you honest advice on what course of action is best for you in their professional opinion and will always put taking care of your best interests first! With offices in Windsor, Tecumseh, Kingsville, and Chatham, no matter where you are a Jump agent is ready to help. Please contact us for any housing needs and let us give you a better real estate experience!