To make it simpler, assignment sales lets the buyer of a home to sell the property before they even take possession of it.
In areas like Ontario, assignment sales are common to the pre-constructed homes and condo units compared to resale properties. On the other hand, they are also possible to any type of trade.
If it is done the right way, assignment sales are legal and this can be useful for the buyers and the sellers alike. A great sample of this would be an instance where the personal or financial situation of the buyer changes before it closes. This lets them pass along the contract to a new buyer.
For example, someone can buy a condo unit which is still under construction and may not be ready for the coming years. The assignee's work or family situation can change during that time that will cause them to change their minds about living to the condo that they have purchased. Another instance is when a buyer suffers from a financial difficulty and close the existing house and might want to look for another buyer instead of risking the financial penalties which might come from backing out of the deal.
Latest media reports in in Canada has suggested that some of the real estate professionals in their country might have been using assignment sales in making more money on a deal without the need to tell the seller clients about what they are doing. If there is a registered real estate agent involved in this transaction, they have an obligation to the clients. Some of these obligations include disclosing when they have personal interest on the transaction which goes beyond the commission where they planned to transact.
Ontario has some rules that require the real estate agents in disclosing the any personal interest in every purchase or sale. There can also be a disclosure obligations if similar brokerage are representing the buyer and the seller in the same transaction and the assignee wants to assign his purchase to another buyer. By then, the seller can make an informed decision to include the assignment clause to their contract.
Areas like Ontario has obligated all of the real estate agents to act with integrity, honesty, and fairness one they have dealt with the others in a real estate transaction, while at the same time protecting and promoting only the best of interest of their clients. The representative of the seller is expected to help the seller to weigh the pros and cons in giving the buyer an ability in assigning the property to a new buyer.