Things to remember: Pre-closing Agreements of an Assignment of Purchase forÂ New Condos
When the agreement is assigned, consent is almost always required and charged for by the Builder. Need to determine the cost of consent and who pays it.
- Does the Purchase price for the assignment cover (i) The Assignment fee (ii) The Deposit and the extras already paid by the Assignor.
- Who will pay the H.S.T on the Assignment and what amount is it on, if payable; just the assignment fee or the assessment fee as well as the deposits.
- It is key to remember that the property must never have been occupied prior to closing to get the HST rebate on closing.
- The Assignee needs confirmation, that the Builder will credit him/her the HST rebate on closing.
The Key to many of these HST questions is what was the intention of the Purchaser/Assignor at the time of entering into the Purchase Agreement.
- If the Purchaser/Assignorâ€™s intention was to resell/assign the agreement the Purchase Agreement will be a Builder under Tarion, and will have to register as much.
- The intention also determines if HST is payable on the Assignment. If his/her intention was to resell, HST is payble on the Assignment.
- The good thing from the Assigneeâ€™s point of view is that regardless of what the purchase agreement states, the Assignee can claim the HST rebate if he/she otherwise qualifies for the rebate.
- Unfortunately the OREA forms of Assignment Agreement for condos does not deal with the fundamental questions of intention of the HST. The phrase â€œincluded inâ€ does not address the issue of â€œHST exempt/HST taxable”.
Prepared by : Donald J. Travers of Paquette Travers & Deutschmann
Toll Free: 1-877-744-2281 Email: Don@PaquetteTravers.com