What to Know About Assignment Sales Before Entering a Pre-Construction Deal
Wednesday Aug 27th, 2025
Pre-construction properties offer exciting opportunities for buyers — from locking in today’s prices to customizing finishes and benefiting from new builds. However, one aspect that often requires careful consideration is the concept of assignment sales.
An assignment sale occurs when the original buyer of a pre-construction unit decides to sell their contract rights to another buyer before the project is completed. This can create benefits but also involves specific risks and legalities that are important to understand before jumping in.
Here’s what you need to know about assignment sales before entering a pre-construction deal.
What Is an Assignment Sale?
When you buy a pre-construction condo or home, you’re essentially purchasing the right to a property that will be built in the future. This contract often has a resale or assignment clause allowing you to transfer your purchase agreement to someone else — the assignee — before the building is completed.
Assignment sales enable buyers to exit their contract early, often at a profit if market prices have risen. For investors and buyers alike, this can be an appealing way to capitalize on market appreciation or avoid closing on a unit they no longer want.
Key Considerations Before Getting Involved
1. Assignment Sales May Require Developer Approval
Not all developers allow assignment sales, or they may impose conditions or fees. Before purchasing, review the purchase agreement carefully to understand if assignment is permitted, any associated costs, and the required approval process. Some developers may charge a fee equal to a percentage of the sale price or require the new buyer to meet specific criteria.
2. Legal and Contractual Complexities
Assignment contracts can be complicated. The original buyer remains responsible until the assignment is approved and completed, and in some cases, they may be liable for damages if the assignee fails to close. Both parties should work with experienced real estate lawyers familiar with pre-construction and assignment sales to navigate terms, liabilities, and timelines.
3. Tax Implications
Profits from assignment sales are generally considered taxable income. For investors, this can impact capital gains calculations or business income. It’s important to consult with a tax professional to understand how assignment profits or losses affect your overall tax situation.
4. Financing Challenges
Traditional lenders may be hesitant to finance assignment sales, especially if the project isn’t complete. If you’re buying an assignment, prepare for more stringent financing conditions, including potentially higher down payments or interest rates. Cash purchases are common in assignment transactions to avoid these hurdles.
5. Market Volatility
Assignment sales rely heavily on market conditions. While rising prices can create profitable opportunities, market downturns may mean the assignment value is less than the original purchase price, leading to losses. Always evaluate the broader market trends and risks before entering an assignment deal.
6. Timing and Closing Coordination
Because pre-construction projects can face delays, the timeline for closing an assignment sale may be uncertain. Both original buyers and assignees need to remain flexible and informed about construction progress, deposit schedules, and occupancy dates.
Why Buyers Consider Assignment Sales
- Flexibility: Assignment sales offer an exit strategy if personal circumstances change before the project completes.
- Investment Opportunity: Early buyers can realize profits without ever physically owning the unit.
- Access to Units: For some buyers, assignments provide access to desirable units no longer available directly from the developer.
Final Thoughts
Assignment sales are a unique feature of pre-construction real estate that offer both opportunities and challenges. Whether you’re considering selling your contract or buying an assignment, it’s essential to fully understand the legal, financial, and market implications.
Working closely with real estate agents, lawyers, and financial advisors experienced in pre-construction transactions will help ensure your assignment sale or purchase proceeds smoothly and aligns with your goals.
Entering a pre-construction deal armed with knowledge about assignment sales can protect your investment and open doors to strategic opportunities in a dynamic market.
