How to flip?
When you have a contract of purchase and sale of the property, the property price increased substantially before completion date, you can assign the contract to a third party to realise the gain. You enjoy the profit on hot market before the downturn of property price and save on closing cost.
What is assignment
the transfer of rights held by one party—the assignor—to another party—the assignee
When is the opportunity to flip?
§ When you buy property with intention to flip, make sure you have the buyer with you name and “assigns”. There was an old version using “nominee” but this is prohibited because that could allow buyer to escape the responsibility on contract.
§ A long possession period for market price to elevate for your flipping gain
§ If the property is a new property, you may need to developer’s consent to assignment before closing. Ask the builder first, before you buy. BTW, it’s usually the assignor pay the assignment fee to the developer
Understanding the Risk? Minimizing the Risk
If you are assigning or buying an assignment from a New Development, you may have these questions in your mind. Clarify it!
- What if the developer does not complete construction of the building?
- What if the developer elects not to proceeds?
- What if the construction is faulty or the units are smaller than expected?
- If you are the assignor, what if the assignee does not pay the increased deposit?
- If you are the assignor, what if the assignee does not close?
- What if the market has a correction?
What is my legal right and obligation?
Understand your legal position, are you an assignor (have a valid purchase of the property and intend to sell it to another buyer) or an assignee (a purchaser intend to buy from a person who as a valid purhase of the property)
Make sure the assignor has the right to assign and the assignee has the right to receive a valid assignement by referring to the orignal contract.
The Seller(or Developer) has been given notice in writing of the assignment, and eventually obtained the developer’s consent to Assignement of the contract.
If either parties are corporate entities, make sure the individual signing on behalf of the corporat eentity has the authority to bind the coporation. (company search and a copy of corporate resolution)
Proper photo id of both parties be clear and verified. (your realtor would work on this)
Deal with the initial deposit made by assignor under the original contract.
Discuss when to release the assignment amount. Choices are 1) on submission for Registration in appropriate Land Title Office, which favor assignee’s interest, 2) on subject removal, which favor assignor’s interest, or compromise at choice 3) such that a Portion release on subject removal and balance on submission for registration.
Assignment Contract - what to look for