A buyer in BC wants to assign their pre-sale contract for a new development condo to a third party. Which statement is correct?

Q: What is the correct answer to: A buyer in BC wants to assign their pre-sale contract for a new development condo to a third party. Which statement is correct?

The correct answer is Assignment is permitted only if the original contract allows it, and the developer's consent is typically required. Option B is correct because in BC, assignment of a pre-sale contract is governed by the terms of the original purchase agreement. Most developer contracts include assignment provisions that require the developer's written consent before an assignment can proceed. Additionally, BC legislation (including the Property Transfer Tax Act) imposes tax reporting requirements on assignments of pre-sale contracts to prevent tax avoidance through shadow flipping.

Q: What background knowledge is needed for this Contracts & Agreements question?

Pre-sale contract assignments in BC became a significant policy issue during the housing affordability debates. In response, the BC government introduced regulations requiring disclosure and reporting of assignments. The Property Transfer Tax Act was amended to ensure that assignments are properly reported and taxed. Developers often include assignment clauses in contracts that restrict or condition assignments, sometimes charging an assignment fee. Real estate licensees involved in assignments must ensure compliance with all regulatory requirements.

Q: What is a good way to remember the answer to this Contracts & Agreements question?

Remember the two A's: the original Agreement must allow it, and the developer's Approval is typically required. Without both, the assignment cannot proceed. Plus, tax reporting is mandatory. When the exam asks about pre-sale assignments, look for the answer that mentions both contractual permission and developer consent. Reject answers saying assignments are prohibited or unrestricted.

Q: What exam tip applies to this Contracts & Agreements question?

Pre-sale assignment questions often test whether you know that developer consent is needed and that tax reporting requirements apply. The correct answer will acknowledge both the contractual conditions and regulatory framework.

Q: How does this Contracts & Agreements concept apply in real world practice?

A buyer purchased a pre-sale condo in 2024 for $650,000 from a developer in Burnaby. The property has appreciated and the buyer wants to assign the contract to a friend for $750,000 before completion. The buyer reviews the original contract and finds it permits assignment with the developer's written consent and a $5,000 assignment fee. The buyer must also ensure proper PTT reporting on the assignment.

Question

Contracts & AgreementsBCMEDIUM

A buyer in BC wants to assign their pre-sale contract for a new development condo to a third party. Which statement is correct?

Answer Options

A

Assignment of pre-sale contracts is prohibited under BC law

B

Assignment is permitted only if the original contract allows it, and the developer's consent is typically required

C

The buyer may freely assign without any restrictions

D

Only the developer can initiate an assignment