Condo Assignment Guide for Real Estate Professionals by Dennis Paradis

ASSIGNTHISCONDO.COM

Condo Assignment Guide for Real Estate ProfessionalsÂŠ What you need to know about Condo Assignments Sales & Marketing By Dennis Paradis

2014

TORONTO, ONTARIO, CANADA

Condo Assignment Guide for Real Estate Professionals©

Table of Contents About the Author .................................................................................................................................... 3 Introduction ............................................................................................................................................ 4 Brief History & Market Trends ................................................................................................................. 5 Pros & Cons – from a realtor’s perspective .............................................................................................. 7 Assignor & Assignee Benefits ................................................................................................................... 8 Assignment vs. New or Resale ................................................................................................................. 9 Step 1: Prospecting ................................................................................................................................ 11 Step 2: Qualifying .................................................................................................................................. 12 Step 3. Positioning - your USP ............................................................................................................... 16 Step 4. Pricing – CMA & Net Proceeds.................................................................................................. 17 Step 5. Listing Agreement (200a) & Data Information Form (291) ........................................................ 20 Step 6. Marketing the Listing – Exposure without MLS ........................................................................... 21 Checklist............................................................................................................................................ 21 Offers – Form 150 ............................................................................................................................. 22 APPENDIX .............................................................................................................................................. 25 Appendix A1 – Template Letter from Assignor to Builder Requesting Approval – In Principle .......... 25 Appendix A2 – Sample of Builder’s “Acceptance in Principle” to Assignment .................................. 26 Appendix A3 – Sample of Builder’s Consent to Assign and Amendment – Page 1 of 3...................... 27 Appendix B – Marketing Ideas .......................................................................................................... 30 Appendix B3 – Sample Marketing Plan - A Handout for Listing Prospects......................................... 32 Appendix B4 – Seven Exceptional Marketing Ideas that will help Sell Your Assignment ................... 34 Appendix B5 – Example of Assignment Closing Costs including Adjustments (paid by Assignee) ..... 35 Appendix B6 – Example of Assignment Closing Costs including Adjustments (paid by Assignor) ...... 37 Appendix B7 – Summary of Assignment Costs .................................................................................. 38 Appendix C1 - Example of Form 150 - Schedule B – Distribution of Funds ....................................... 39 Appendix C2 - Simplified Example of Form 150 - Schedule B – Distribution of Funds ....................... 40 Appendix D1 - Recommended Clauses for Form 150, Schedule A ................................................... 41 Appendix D2 - Understanding the provisions of Form 150 .............................................................. 43

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Condo Assignment Guide for Real Estate ProfessionalsÂŠ

About the Author Dennis Paradis, a licensed Realtor since 2003 carries on his practice in Toronto/GTA. He comes to the Real Estate industry from a background in sales and marketing management. His early years include sales training in the computer industry, product management at DEC Canada, and special projects at Bell Canada. He has focused on the sale and marketing of condo assignments in the Toronto/GTA since 2004 and has successfully served many clients who testify to his knowledge, dedication and excellent results. He has a Google page-one ranked website www.AssignThisCondo.com that attracts many visitors because of its content-rich pages. This website will serve as reference, among others for this Guide. Dennis is a proud member of the RE/MAX family of Brokerages with RE/MAX Hallmark Realty Ltd., Toronto/GTA. Dennis@AssignThisCondo.com

/Dennis.Paradis

/DennisParadis

CopyrightÂŠ 2014 Dennis Paradis Disclaimer Clause The Condo Assignment Guide for Real Estate Professional is for educational purposes only, and Dennis Paradis will not be liable for the use or misuse of information, facts, clauses, details or other elements, or for deficiencies, defects, errors, omissions or inaccuracies of these materials. 1/30/2014

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Condo Assignment Guide for Real Estate Professionals©

Introduction Welcome. I am glad you decided to spend time learning about Condo Assignments and have chosen my Guide as a resource. You will find it is densely packed with information, tips and useful tools. My purpose is to help real estate professionals feel confident in approaching condo assignment (listing or buying) and make this another way you can better service your client base and to increase your business reach into what is truly a niche market. From the perspective of early 2014, the condo assignment market is expected to continue to grow as more and more condo completions are happening in Toronto/GTA and the rest of Canada. See the next section, Brief History and Market Trends. This guide will apply to situations across Canada with the exception of a few terms of no great significance, e.g.; in Toronto its “condo”, in Vancouver its “strata” and Quebec its “syndicates of coownership”. You have picked a good time to jump into this boom market and I wish you great success. Please contact me if I can be of assistance or you have any questions or suggestions. I appreciate any information to improve the Guide and correct any deficiencies or errors. Of course, I love referrals and testimonials as do all real estate professionals, so don’t restrain yourself ;-0 Best Regards

Dennis Paradis Sales Representative RE/MAX Hallmark Realty Ltd., Brokerage Mobile: 416-399-5832 Email: Dennis@AssignThisCondo.com Website: www.AssignThisCondo.com

To Order more copies of this Guide: You can Purchase Here Please do not make copies without permission in Writing from the Author – Thank You

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Condo Assignment Guide for Real Estate ProfessionalsÂŠ

Brief History & Market Trends First condos in Canada were registered in 1967 in Ottawa and Edmonton. The concept of assignment is as old as contract law since it applies to the principle of transferring the rights and obligations of a contract or agreement. No one knows when or where the first condo assignment occurred in Canada but there is no doubt that as of 2014, Toronto has established itself as the condo capital of North America , if not the world, by a fairly wide margin. Condo completions in 2013 hit a high point of around 18,000+ units in Toronto/GTA. To put this number in perspective, the range in the decade up to 2013 was 10-15,000 units. There is no easy way to determine where, when and how many condo assignment sales are made each year since these are private sales between the Builder and their buyers (original and replacement/new) and do not get sold thru MLS. Assignment sales are as hard to track as sales involving multiple offers but as real estate professionals, we get a sense of the action and on a subjective basis most who are active in this market would agree that we are experiencing a trend upwards in the number of assignments in Toronto/GTA. The next two years are likely to see this peak and perhaps decline after 2016 as illustrated in the graph below.

Condo Completions in Toronto/GTA â&#x20AC;&#x201C; 2004-2016

Source: RealNet Canada 1/30/2014

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Condo Assignment Guide for Real Estate Professionals©

Glossary of Terms – Abbreviated Version

These few defined terms will help you navigate thru this Guide but for a complete, online and indexed Glossary you should refer to my website www.AssignThisCondo.com - use the Glossary tab.

Agreement of Purchase and Sale (OREA/TREB Form 150) is the new Agreement that sets out the price, terms and conditions of the assignment between two parties - the Assignor and Assignee. The Vendor is NOT a party to this agreement. Unlike resales, there is no date for Closing specified as this is usually not known when these Agreements are done. Assignor is the original purchaser who is "selling" their Sales Agreement" to the Assignee (new buyer). Assignee is the new buyer who will "step into the shoes" of the Assignor by assuming the Builder's Sales Agreement. Assignment Request is a letter sent by the Assignor to the Vendor's legal department asking for permission to assign their condo. Certified cheques for the fees are required for the request to be considered. We, at AssignThisCondo.com, can help draft this letter as part of our service. Assignment Agreement is a contract created by the Vendor (builder/developer) that specifies the terms and conditions of the assignment and stipulates the fees to be paid. It is usually created by the Vendor's legal department and is drafted in the form of an Offer with an irrevocable date. This Agreement involves three parties: Vendor, Assignor and Assignee. Builder's Sales Agreement is the Vendor's original contract that was signed by the Assignor at pre-construction prices, possibly 2-3 years prior to interim occupancy. The Vendor is often referred to as the “Seller”. Do not confuse this term with the Assignor. Closing or Completion date is when title is transferred to the Assignee and monies paid to the Vendor and Assignor. It is the earliest date that the Assignee can get a mortgage for the unit. Interim Occupancy (or Occupancy) is a benchmark date that allows unit buyers to move-in to their units and begin paying the interim occupancy fees. This is the date that some builders will set as the earliest they will allow unit owners to assign their units subject to their approval and to payment of the fees involved. Interim Occupancy Fees are composed of three factors. A mortgage at a specified rate applied by the Vendor based on the original selling price, the estimated condo fees and the estimated property taxes. In exchange for this fee, the unit buyer (not unit owner since ownership does not occur until closing) can move-in (occupy) the unit. No part of these fees are applied against the purchase price owed at closing. It is like a rent. Vendor/Developer/Builder/Seller are used interchangeably. They may be and often are different companies. 1/30/2014

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Pros & Cons – from a realtor’s perspective Listing-Side Pros 1. Justifies earning a higher commission fee than resale, e.g.; 6% vs. 5%. – split 50/50 2. Offer sellers unique advantages vs. closing with builder or renting – see Assignor Benefits Cons 1. 2. 3. 4.

5. 6. 7. 8. 9.

10.

Complex sale (I trust that by the time you finish reading this Guide we will agree on this). Delayed payment of commission until final closing/unit transfer date (6-12 months or more) Restrictions on advertising by Builder, including MLS and ALL social or print media Serious penalties can be applied by the Builder if they discover a violation of their Assignment restrictions, including breach of agreement, loss of deposits, and eviction from unit if occupied. Suggest never violating these rules without the express permission from your client in writing acknowledging the risks. Tip: Use Networking and/or do not identify the unit or client name in your ads and keep the location/address vague. Lower conversion of list to sale than resale No showings, pictures, or open houses unless Occupancy has occurred. After Occupancy, unit is vacant and unfurnished but can be staged (recommended). Harder to establish a value for List Price (also impacts financing for potential buyers). Listings subject to “soft stop” namely Interim Occupancy – Assignor may decide to rent out at this point. Some Builders have a 30-60 days blackout proceeding assigning before this date (assignor can assign only AFTER Occupancy occurs). Listing subject to “hard stop” at or near final closing. Assignor may decide to rent out or occupy (very unlikely to re-list as a resale because of HST rebate and closing costs make this a poor financial choice. Some Builders have a 30-60 days blackout prohibiting assignment after these date. Check for these restrictions BEFORE you agree to take the listing.

Buyer-side Pros 1. Better serve buyer clients - follow-on sale of new condo sale 2. Better serve investor clients – best exit strategy alternative to hold & rent. 3. Offer buyers more options vs. new or resale. 4. Usually can earn a premium co-op fee vs. resale, e.g.; 3% vs. 2.5% Cons 1. 2. 3. 4.

Complex sale (less so than listing but not by much) Delayed payment of commission until final closing/unit transfer date (6-12 months or more) No showings, pictures, or open houses unless Occupancy has occurred. Harder to establish a value for List Price (also impacts financing for potential buyers).

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Assignor & Assignee Benefits Assignor Benefits (original purchaser) These benefits compare to closing with the Builder and selling immediately or after 1 year. 1. 2. 3. 4. 5.

Avoid paying final Deposit at Occupancy to the Seller (Builder). Avoid paying Interim Occupancy Fees + Utilities not covered by Maintenance Fees. Avoid paying renterâ&#x20AC;&#x2122;s insurance required during Interim Occupancy. Avoid Closing with the Seller (Builder) with all the new condo closing costs. Avoid HST Rebate Tax disqualification because you resell your condo within one year after closing with the Builder. This can cost up to $27,000! 6. Or, avoid having to become a landlord (renting) for a year to remain qualified for the HST Rebate. 7. Retain status as first -time home buyer rebates, if applicable, as title is not transferred. Assignee Benefits (new purchaser) These benefits compare to buying directly from the builder or buying a resale. See table following. 1. Prices are lower than new condos in most cases than current builder prices especially if assignor managed to get cashbacks, free upgrades, TTC passes, caps on levies and a host of other possible incentives that may not be available from builders in the current market. Note: This situation can swing both ways, and the incentives on new condos might be better than when the Assignor is selling. For example, 2014 is predicted to be a year when Builders offer aggressive incentives as a record number of condo completions occur. See Brief History & Market Trends. 2. More certainty about when occupancy and final closing will take place vs. buying into a new project in the first phase (3-4 years away from Occupancy). 3. Lower deposits required: 10% vs. 25% (vs. buying from Builder about the same as resale). Usually the Assignor has paid all the deposits except the Occupancy deposit (typically 5% of the Original Purchase Price. Add the 5% deposit required by the Assignor on the Assignment Agreement (based on the New Assignment Price) and you have a much lower cash requirement to buy an assignment. The deposit is also not held for years but for a matter of months. Assignee Concerns Many of these concerns are similar to buying a new condo from the Builder but remember the Builder has a fancy sales centre, soft music, free coffee and is likely a household name vs. you and your client who are not even on MLS and selling thru lesser outlets like Kijiji and Craigslist along with used bicycles and assorted other offerings. Under marketing, this Guide provides ways to reduce or eliminate these concerns. 1. Occupancy Fees: How long will they have to pay these? 2. Buying air and paper: No showings and no sales centre 3. Open-ended closing costs: especially adjustments like uncapped levies. 1/30/2014

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Assignment vs. New or Resale Item Occupancy date Occupancy period Deposits

Assignment 1-2 mths or immediate 1-12 mths - uncertain 10% or less (5 % to Builder

New 3-4 yrs & uncertain 1-12 mths - uncertain 25% to Builder

Resale 2-3 mths - known n/a 5-10%

+ 5% on Assignment)

Access to unique sold out new condo projects

Showings HST Newness Newness Newness Newness

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Yes

n/a

usually not Included but on original price (savings) 3-4 yrs old Never occupied Latest appliances Latest amenities

never Included but on current (higher) price Under construction Never occupied Latest appliances Latest Amenities

Few resales available until 1 year or more after assignments because of HST rebate. yes n/a Older Has been occupied Older appliances Dated Amenities

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Condo Assignment Guide for Real Estate Professionals©

Seven Steps of the Assignment Sale

Step 1: Prospecting Step 2: Qualifying – builder permission & prospect needs Step 3: Positioning - your USP Step 4: CMA & Net Proceeds Step 5: Listing Agreement Step 6: Marketing Step 7: Offers – Form 150

About Navigating this Document  Links in blue are to outside sources.  Ctrl-Home key will take you back to the first page of the Guide  Underlined (in black) words or Phrases are links to other sections of the Guide – Use the mouse with the Ctlr Key down to use these links.  The Table of Contents is indexed (linked to this section in the Guide) - – Use the mouse with the Ctlr Key down to use these links.

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Step 1: Prospecting 1. Check with your past new condo buyers who may be approaching their Occupancy Dates and not be aware of this option to sell prior to closing. Some of my clients have come from new condo buyers who were upset that the realtor who sold them the condo did not follow-up with them to offer this option. 2. Canvass your investor clients to see if they would like your advice on using this exit strategy (also for buying). 3. Talk to your fellow realtors who may like to co-list or refer assignments for their clients because they are not experienced or have no time or interest in doing an assignment sale. 4. Use free social media ads like Kijiji (you can post under service categories, not just post listings). 5. Pay for ads on Google Adwords or Bing or LinkedIN. 6. Develop a Blog dedicated to condo assignments (or add to an existing Blog as a post). 7. Develop dedicated websites (www.AssignThisCondo.com or add a page to your current website.

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Step 2: Qualifying Qualifying - Basics These basic qualifying questions need answers even before you get into the assignment specific ones that follow: 1. 2. 3. 4. 5. 6. 7.

Are you currently working with a realtor? Do you want/need to make a decision soon or are you researching? Are you the “owner” of the condo? Anyone else? Why are you assigning your unit? (see Reasons & Needs below) Have you done this before? And how did that turn out? How did you find me? My fees are higher for assignments than for resale – will this be acceptable if I can prove why this makes sense and benefits you? Don’t waste time with price-only shoppers.

Qualifying – Assignment Specific A. Builder’s Permission: Don’t waste your time at this point with too much selling/positioning and certainly do not get into detailed valuation/pricing (a time consuming task) before you get proof that the builder will allow assignments and under what conditions. Restrictions and Conditions - Examples 1. Almost always restricts use of MLS. Builders monitor MLS for violations. 2. Almost always restricts use of any online or print media (Kijiji, Facebook, Toronto Star, etc.). Less likely to be monitored and unlike MLS you can be vague on identifying the unit and not even mention the Assignor. 3. Usually requires payment of an assignment fee but usually only after you get a firm Assignment Agreement (Form 150) in place. The fee is often 1% of the original purchase price or about $3-$4,000 plus HST but it varies. 4. May have restrictions on timing (blackouts), e.g.; must be 60 days or more before Occupancy or Closing. These restrictions may negate the purpose of the assignment if the client is wants to avoid either of these two events thru assigning. 5. May require that a certain percentage of units be sold, e.g.; 90% and or that all units of the type your client wants to assign; by type (1 bedroom) or model (Daisy). 6. May have restrictions that all deposits be paid except the final one usually due on Occupancy, or they may only allow assignments after Occupancy has started. Refer your prospect to their Builder Sales and Purchase Agreement and have them email or fax the page to you so you can help them understand what it says (and CYA*).

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Some prospects will be experienced and knowledgeable (or think they are) and assure you that they can assign their condo and want to proceed to the next step.

Ask your prospect to send you the page(s) anyway as well as the written permission they should have from the Builder.

You should be building an extensive file, i.e.; “a paper trail”, in doing this sale and it must begin with these two pages/docs. *CYA – “cover your ass” To provide an added service to potential clients, you can offer to provide them with a template of a request letter/email they can use to request the Builder’s permission to assign.

Explain to your prospect that it is best for them to make contact with the Builder rather than you doing on their behalf as they are on record as the purchaser with the Builder. Another option is to get them to go thru their lawyer (perhaps the one they used to handle the original purchase). Some lawyers may charge a fee as high as $300-$400 for doing this. You can save them this expense and begin establishing your value-add as their realtor by handling this task before you ask for the order (the signing of the exclusive listing agreement). Regardless of who sends the letter/email/fax, it should go to the Builder’s lawyer on record for the condo project that will be identified on page 1 of the Builder’s Sales and Purchase Agreement. Do not bother contacting the Builder’s sales centre as they have no interest in helping anyone assign their units and will usually say it is not allowed even if it is. Also, they may try to grab your prospect as a client - some Builder’s offer a realty service to do assignments. Note: most Builder sales reps are very knowledgeable and helpful and are a pleasure to work with but be aware of the exceptions that can occur. B. Prospect Reasons & Needs Determine the reason(s) your prospect wants to assign their condo and under what conditions. They may have always intended to “flip” their condo or they may have intended to owner-occupy or to rent but their circumstances have changed (job transfer, job loss, health, marriage, new baby, divorce, etc). You need to probe beyond the basic reason and find out what they want/need from this assignment sale and then determine if you can realistically expect to deliver this. Here are four categories of needs.

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Four Categories of Needs 1. 2. 3. 4.

Profit Fast Cash Avoid Occupancy Costs Avoid Builder Closing

1. Profit Are their expectations (or needs) for making a profit realistic? In 2013, many condo assignments were merely breaking even because of over-supply of these types of offerings and the completion from Builder’s getting aggressive on pricing to sell their own inventory. This is expected to get worse over the next few years. See graph, Brief History and Market Trends. You will need to assess the market conditions (as you would for resales) to determine what the profit picture is like currently. If they are clearly expecting profits significantly out of line with the market then you may want to drop this prospect or refer them to someone you don’t like.

Usually, you will need to do Step 4. Pricing – CMA & Net Proceeds before you can properly qualify them on profit requirements but if they seem have made up their mind on a profit figure and it is clearly unrealistic, then drop the prospect or refer them out. 2. Fast Cash When do they expect/want/need to receive the Net Proceeds from the sale? There are three basic choices (as per Form 150, Schedule B): 1. Upon Acceptance of the Assignment Agreement and Builder Consent 2. Upon Occupancy and Builder Consent 3. Upon Final Closing Here is the challenge with trying to achieve either 1 or 2 above: few buyers will be have the cash to pay the original buyer (Assignor) his deposit on the Assignment Agreement plus the return of the Assignor’s deposits paid the Builder plus the Assignor’s profit all without the benefit of a mortgage since no title is transferred until Final Closing.

You should seriously consider walking away from this prospect if they insist on only looking at Offers that provide “fast cash” as per item 1 above. You can say that you will try but they must be prepared to accept Offers that do not provide this.

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3. Avoiding Occupancy Costs This is a timing issue and depends on a number of factors, such as; how much time do you have before this date occurs, how is the market (neighbourhood and building), how aggressive is the price.

Occupancy Date is a moving target as Builders can and often do change (with proper notice) these dates most often extending them (but can also pull them in closer). Check to see if your prospect has their “Final Occupancy Date” vs. a “Tentative”. Remember that selling prior to Occupancy is more of a challenge as you do not have access to the unit for showings, pictures, or Open Houses. And, you cannot plant your “For Sale” sign (same as most condos resales). Failing to meet this need for the client means that they will forced to pay the Interim Occupancy Fees for their unit as well as any utilities e.g.; hydro often not included in the condo fees. This is a pure profit drain. The plus side is that you can now take pictures (for brochures, website, e-blasts, etc) add a lockbox and do showings and hold open house events. You can also consider and recommend staging the unit – See Step 6. Marketing the Listing

4. Avoiding Final Closing This is usually the ultimate and main need of your prospect and they will compromise (if they can afford to) on any other need but this one. The best you can hope for if you miss this mark is that they will choose to sign a new Listing Agreement with you. The commission might be dropped to more standard resale rates (5% vs. 6%) and the price will usually be adjusted upwards to cover the Builder closing costs (10% or more) but you will now have full MLS and other media ads at your disposal. Most often they will opt to hold the unit for at least one year and rent it. The main incentive for them to do this is to avoid the dreaded “HST Rebate Disqualification” that can cost up to $27,000. See Reports at www.AssignThisCondo.com. There are two reports: 1. HST Rebates on New Condos Simplified 2. The Truth About HST Rebates on Pre-Construction Condos Congratulations, you have a qualified prospect with: 1. 2.

Builder Permission to assign in writing and have a copy of these docs. Clear priority of needs that you can reasonably expect to achieve for them.

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Step 3. Positioning - your USP Now that you have a qualified Prospect, you now need to make them your Client. Here are some ideas: “USP” stands for “Unique Selling Proposition” or why should someone choose you over someone else. What makes YOU stand out? Much of what you can do and say to position yourself well is what you should do in ALL your selling situations. However, this Guide is focused on condo assignments and will confine the positioning points to this area. You should present your credentials that relate to condo assignments perhaps including some or all of the following items: 1. Your experience/track record with listing condos including resale and hopefully a few condo assignments. 2. Your current assignment listings (if any). How you will market their condo (especially without the use of MLS) – social media and networking become even more important now (see marketing) 3. Your listing-to-sales success ratio or percentage (conversion rate). If you have no condo or condo assignment experience then you will need to rely on your other amazing talents, testimonials and razzle-dazzle personality. The “likeability” factor trumps most logical points anyway.

If you have been in real estate or any other professional sales position before and been successful at it, you will know that qualifying and positioning are continuous processes throughout the sales cycle.

Team Work - Lawyers As with selling resales you want to have a team of professionals to take care of the related needs of your client in an assignment sale. Be sure to strongly recommend to your client and to the realtor on the other side, to hire ONLY an experienced condo assignment lawyer. Experience with resale or new (pre-construction) is not sufficient. I am tempted to add clauses in the Agreement to specify that both lawyers need to be qualified but it is not an official designation. Team Work - Lenders For the Buyer side, it is recommended the lender be experience with condo assignments but it is not as crucial as the Lawyer’s qualifications. It should be! 1/30/2014

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Step 4. Pricing – CMA & Net Proceeds CMA : Competitive or Comparative Market Analysis Net Proceeds aka Net Profit = Gross Profit (Original Purchase Price – Assignment Price) minus Costs Doing a CMA for a condo assignment is more challenging than for a condo resale for several reasons: 1. 2. 3. 4.

You cannot view the units unless occupancy period has begun (usually it has not). There is no MLS sales history, Current listings, if any, for the project are limited to Kijiji or Craigslist and lack MLS details. Any assignment sales are not part of the public record until final closing when title is registered and thus too late to help the assignment CMA process.

The Answer: Use Builder and Resale Comps (comparisons) Builder comps Compare to what the Builder was/is selling units for in the same building/same phase or in another building in the same development/project. You will need to know how to make adjustments for differences as you do for resales . 1. Prices quoted by Builders are usually without Parking and Locker and are for the base floor , e.g.; floor 3 or 4 (above the Lobby and perhaps the amenities floor) with $1-2,000 added per floor as you go up to higher levels. 2. Cashbacks that your clients may have should be taken off the Offered Price and used to compare with the competition as these will be assigned to the new purchaser. Obviously, any cashbacks in the Builder’s prices you compare need to be accounted for in the same way. 3. Other Incentives need to be adjusted for by estimating their value, e.g.; from a few hundred dollars (TTC passes) to several thousand dollars (caps on Levies). Builder New Unit: Used as a Comparison for the CMA Assignment - Target

Builder New Unit

Value

Note

Call the sales centre Base Price $300,000 Parking Yes No +35,000 Locker Yes No +5,000 th th th Floor/level 15 (no 13 ) 4 +1,000 10 x $1,000/flr Cashback $5,000 None +5,000 Free Assignment No Yes - 3,000 Typical cost Adjusted Value $343,000 Note: This is a simple example perhaps same model and usually more differences exist between units.

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Resale comps Compare to resales in the same neighborhood and adjust for differences. 1. You have selected building nearby as close to age as possible to the target building. 2. You have selected comp units as close to the same size and type (from MLS solds). 3. Age of the building is a factor for amenities, building design and suite features – appliances etc. Resale Unit Used as a Comparison for the CMA Assignment - Target Base Price Mths since sold

Resale Sold 6 mths ago

Newer appliances Better amenities Size Adjusted Value

30 SF larger

Value $340,000 +1,000 +5,000 +10,000 -15,000 $341.000

Note Sold on MLS 6 x mthly market rate of growth, e.g,; 05%

30SF x $500/SF

Other Approaches to Determine Assignment Condo Market Value Purchase-Plus Calculate the Breakeven price and add a dollar amount, e.g; $5,000 as profit or add a % over Original Purchase Price

Market Growth Apply a computed (from research) market growth for new condos of a similar type and size for as close to the same location as possible and apply this to the Original Purchase Price for the period of years from the purchase date to the present.

Average $/SF Compute an average value per square foot as close to the target condo unit a possible and apply this to the area (SF) of the target condo (not including balcony in either calculation).

Any of the above three values can be used by themselves or as a “sanity check” on the more stand CMA approach.

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Net Proceeds Report You may need to ask your prospect for additional information to complete this report. The Formula Net Proceeds = Gross Profit (Original Purchase Price – Expected Assignment Price (often different from List Price as usual) – All Assignment Costs Assignment Closing Costs: 1. 2. 3. 4.

Realty fees based on the New Purchase (assignment price) + HST Assignment fees Legal Fees Staging costs, if applicable

Additional Costs for Occupancy Interim Occupancy fees + Unities (not covered by the fees) +condo renter’s Insurance. This applies only if this is incurred by your prospect. This monthly cost must then be multiplied by the estimated time (months) you estimate for the duration of the Occupancy Period your prospect will be paying for (up to the day the Assignee takes over).

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Step 5. Listing Agreement (200a) & Data Information Form (291) Condo Assignments use the same Listing Agreement and Data Information Form as condo resales; namely Form 200a and 291 respectively. Strongly recommended you get a complete copy of the documentation that your client has received from the builder including the Builder Agreement, any amendments, condo documents (declaration and disclosures, by-laws and rules) plus the marketing materials, décor selections, cashbacks and upgrades. This is a great deal of paper to deal with and perhaps should have been listed as one of the cons for the Listing of an Assignment. These papers are what the Assignee is paying for and will by binding himself to so their details are vital to understand. The Lawyers for the parties will need to review these docs and they will be attached as Schedule “C” to the Assignment Agreement. Key points 1. Exclusive - Almost always check the box for “exclusive listing” (no MLS). 2. Missing Data - You may not have information for some of the fields as you would normally have for resale, like municipal address, condo corp no, parking and locker locations/descriptions, condo fees, property taxes. 3. Longer Listing Period - Recommend using a minimum of 6 months for the listing period as these sales take twice as long (or more) than resales.

1. Property taxes are not known as the condo building/project is not registered or assessed. Use an estimate that the Builder provided in their marketing literature and add the proviso that it is based on the Builder’s estimate. This is usually 0.75 – 1.0 % of the original purchase price. 2. Condo fees are not know and again you should use the Builder’s estimate that is usually based on a price per square foot ($/SF). 3. Pet Rules are very important. Check the condo docs for information on pet restrictions. This can be a deal breaker. Same issue as resales but harder sometimes to determine . Check the docs, it’s there somewhere. 4. Due Diligence. Check, but don’t rely on, what other realtors may have stated in their Kijiji ads about their listings. Always verify all your facts and/or qualify their source and reliability. When in doubt say so and have you CYA (paper trail) in writing that this was explained to your Client.

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Step 6. Marketing the Listing – Exposure without MLS Here is a list of what can and should be used for exposure of your condo assignment listing listed in order of most-to-least effective (based on the author’s experience): See Appendix B1-B7 for more ideas and client-ready material that highlights these ideas. Checklist 1. MLS not available but mentioned to make a point about the challenge you face. 2. Networking – join your Facebook Group (or create one just for exclusive listings/assignments), do email blasts, do pitches at brokerage weekly meetings (at all their locations, not just the one you pick up your mail at). 3. Resident Expert. Become your Brokerage resident expert on Asssignments and do free seminars to build networking. 4. Canvass your database – phone, email, e-Newsletters to your base especially targeted to buyers and investors. 5. Brokerage Database - encourage your Brokerage to develop a database of assignment listings just for your Brokerage and have it distributed monthly. Better still, develop an online, searchable database with signon security (private to your group). 6. Website and blogs - start new or add to. 7. Kijiji (needs managing to keep on page 1) 8. Facebook - business page - don’t use your personal page for business, violates FB culture. 9. Craigslist – second best to Kijiji but worth the trouble 10. Property World – an international reach, also free. 11. Precondo.com – no FSBO or merely postings (min 2.5% co-op) and free. Used by Agents only, no public search. 12. Google Adwords, Bing and LinkedIN ads – not free and can get expensive using “pay per click” and often clicked by other realtors looking for information for themselves, not for buyers.

1. Create a MLS Listing on MLS and save it as a “Draft” – print this to a PDF file or print and scan and safe as PDF. Add this as an attachment to your marketing material (realtors and the public are comfortable with the format. 2. Add “Walkscore” wherever you can with live link and/or the description of their rating for your listing, e.g.; “walker’s paradise. www.walkscore.com 3. Shamelessly strip pictures from the Builder’s or other realtor’s websites/postings to use for your listing but try to match the unit specific pictures as close as you can or note the differences in the captions, eg; unit shown is Builder’s model and may differ from actual unit” or the floors shown are rugs but the actual is true hardwood flooring” 1/30/2014

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4. Use external depictions or actual real photos of the exterior of the building to give prospective buyers an idea of the location and view the unit will have. Use the floor plate provided by the Builder to determine the unit’s location in this way, plus the floor level info provided. See Appendix - Marketing Ideas. 5. Create an info package for prospective buyers that includes a summary of features, the MLS Listing (draft) 6. Use the CMA you created in a simplified form perhaps, to help co-op realtors sell their clients on your listing’s asking price. 7. Create a financial summary of the closing costs, especially the adjustments with special emphasis on cashbacks, incentives (free metro passes), caps on levies, tentative or final occupancy date and “outside occupancy date.” 8. Price the condo net of cashbacks in your marketing but negotiate the offer price to exclude this amount as the buyer (assignee) will get credit from the Builder for this on Final Closing. Example: cash back is $5,000 and your client wants $300,000 final price for his condo. Advertise the price as $295,000 and accept an assignment price of $300,000 explaining to the buyer that the net price is/will be $295,000.

Offers – Form 150 This form must be used for condo assignments, not Form 100a that is used for condo resales. If you get an Offer on Form 100a you are dealing with a newbie realtor and you will need to provide a lot of support to make sure the deal does not crash. Help him process the offer using Form 150. Table: Key Differences – Form 150 vs 100a Items Seller Buyer Assignment Assignee covenants Assignor covenants Schedule A Schedule B Schedule C Schedule D

Form 150 Assignor Assignee defined defined defined Terms and Conditions Distribution of Funds Builder’s APS Brokerage Interest info

Form 100a Seller Buyer n/a n/a n/a Terms and Conditions Brokerage Interest info tbd tbd

Form 150 - Schedule A – Terms and Conditions See Appendix D1: Recommended Clauses and Conditions for Form 150, Schedule “A” See Appendix D2: Understanding the Provisions of Form 150

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Form 150 - Schedule B – Distribution of Funds This is one of the most challenging parts of Form 150 but it is critical to assignment deals to get this completed fully and accurately. The Schedule makes it clear how the “Balance of Payment” [item 6] is derived. It shows that it flows from the elements of the deal including all the following: [Text in square brackets and bolding added by author] Form 150 - Schedule B – Distribution of Funds (modified for illustrative purposes) 1. Total Purchase Price including the original Agreement of Purchase and Sale (Builder’s Agreement) and this Assignment Agreement: [before cashback, if applicable]

$______

2. Purchase Price of original Agreement of Purchase and Sale [Builder’s Agreement] as indicated in Schedule “C”: $______ 3. Deposit(s) paid by Assignor to the seller (Builder) under the original Agreement of Purchase and Sale [Builder’s Agreement} as indicated in Schedule “C”, to be paid by the Assignee to the $______ Assignor as follows: …………………………………………………………………………………………………………………………………………………………………. [Choose one by circling or crossing out the ones that do not apply] (Upon acceptance of this Assignment Agreement and receipt of consent to assign from the original seller [Builder], if applicable.) (Upon occupancy by the Assignee and receipt of consent to assign from the original seller [Builder], if applicable.) (Upon final closing of the original Agreement of Purchase and Sale [Builder] and this Assignment Agreement)

4. Payment by Assignee to Assignor for this Assignment Agreement: {Calculated from above: item 1 minus item 2 plus item 3] 5. Deposit paid under this Assignment Agreement (in accordance with Page 1 of this Assignment Agreement or as amended by Schedule A and/or Schedule D, if applicable): 6. Balance of the payment for this Assignment [owed by the Assignee]: [Calculated from above: item 4 minus item 5] The following is not part of the Standard Form 150 but will serve to reconcile with the Purchase Price of the Assignment Agreement: 7. Final Deposit to seller {Builder} at Interim Occupancy, if applicable

$______ $______ $______

8. Balance owed to seller {Builder} on Final Closing {item 6 minus item 7} 9. Add back Deposits in 3. above Add back Deposit in 7. Above Add back Assignor’s Gross Profit (item 1 – item 2) Add back Cashback (if any) 10. Purchase Price of Assignment: Item 8. adjusted by items in 9. See Appendix C1 & C2 for Examples of Distribution of Funds, Schedule B

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Final Approval from the Builder Congratulations, you have a Conditional Assignment Agreement and AFTER the conditions are removed/waived you will have a Firm Assignment Agreement. One of the conditions comes standard with Form 150. That is; Builder’s Approval. Do not pursue the Builder’s Approval until you have all the other conditions of the Assignment Agreement taken care of as the Builder will want to be paid his Assignment Fee at this point.

Process You, or your lawyer simply notify the Builder of the name, etc of the Assignor and they will create a document based on their standard template. This will be called something like “Consent to Assign and Amendment” perhaps a three-page form. See the Sample provided in Appendix A3. The Assignor and Assignee will need to sign this form and it will be returned to the Builder for their Acceptance/Approval. It is presented as an Offer from you to them. Once you receive your signed approval from the Builder, you have a complete and final Assignment Agreement in place.

Switchover date If you wish to have more certainty around the date the Assignor will become the new purchaser, have occupancy rights to the condo, get the keys, pay the fees, etc. then I suggest you add a “switchover date to Schedule “A”. See Appendix D1 – “Switchover Date”

Okay, you did it. Good for you!

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APPENDIX Appendix A1 – Template Letter from Assignor to Builder Requesting Approval – In Principle -

This could be a letter, email or fax, Best sent to the Builder’s solicitor, not to the sales department (they see you as competition). See a formal response from a Builder, A2 following (always best to get something in writing). Even thought they almost never let you use MLS, it never hurts to ask. “In Principle” is used to distinguish this request from the one that will be made once a Firm Assignment Agreement is in place. …………………………………………………………………………………………………………………………………………………

BUILDER COMPANY NAME ADDRESS ADDRESS ATTENTION: DATE

RE: Assignment of condo unit # xxxx at PROJECT and or Address Dear Mr. xxxxxxx: (Builder’s Solicitor) We are submitting a request for assignment as per our Agreement dated (date) and we are prepared to pay the fee as stated in our Agreement upon a successful transfer to an assignee. Our reason for selling is of a personal nature and is at least in part due to the delayed closing and that I find the unit too small for our current needs. We are seeking your permission to Assign our unit and furthermore to list on MLS and advertise thru a third party to enable us to accomplish this assignment. If you have questions, please call us at (telephone). We look forward to receiving your permission to proceed with the assignment. Sincerely, YOUR YOUR YOUR YOUR

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SIGNATURE NAME ADDRESS TELPHONE,FAX AND EMAIL

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Appendix A2 – Sample of Builder’s “Acceptance in Principle” to Assignment

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Appendix A3 – Sample of Builder’s Consent to Assign and Amendment – Page 1 of 3

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Appendix A3(b) –Sample of Builder’s Consent to Assign and Amendment– Page 2 of 3

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Appendix A3(b) – Sample of Builder’s Consent to Assign and Amendment (page 3 of 3)

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Appendix B – Marketing Ideas Since the potential buyers and their real estate representatives cannot benefit from a showing of the unit, it is a good idea to make every effort to depict the orientation/view/exposure of the unit in some way. Using a tool like Jing or Snag-it will allow you to create annotated diagrams & pictures as shown below and on the following page (B2)

Floor Plate: Source: Builder’s website modified with Jing tool

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Appendix B – Marketing Ideas

Source: Builder’s website modified with Jing tool

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Appendix B3 – Sample Marketing Plan - A Handout for Listing Prospects

Assignment Listing Plan How I Will Effectively Market Your Condo without MLS

For [Prospect’s Name] By Dennis Paradis RE/MAX Hallmark Realty Ltd

Networking – RE/MAX & Beyond No better way to reach potential buyers than to be in constant contact with fellow realtors® who are working with clients looking to purchase a condo. Specifically; 1. Present at our weekly brokerage meetings. 2. Feature in our in-house exclusive listings database, dedicated to condo assignments. 3. Feature in our very active RE/MAX Hallmark Facebook Group (including a few hundred of the top GTA agents). 4. Emails to my private database of GTA Agents. 5. Pages Brokerage Group Pages to over 500 agents – initially and reminders. Networking – My Prospect & Client Database (over 1,200 contacts) 1. Email blast announcing the Listing. 2. Phone call prospecting to past clients, buyers and investors. Networking – My Point2Agent Shared Listings 1. Shared listings with over 700 selective agents in the GTA.

Social Media 1. My Websites: a. www.AssignThisCondo.com b. www.DennisParadis.com 1/30/2014

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2. Facebook – Business Page a. www.FB.com/Dennis.Paradis.biz 3. LinkedIn a. www.linkedin.com/DennisParadis Online Media 1. 2. 3. 4. 5. 6.

Kijiji Craigslist Property World PreCondo.com Google Adwords Bing Ads

Selling Paper and Sky You bought your new condo from the builder without the benefit of being able to see, smell and touch your condo unit or even the building it was planned to be in. This is often still the situation facing your potential buyers, and there is not even a sales centre with soft music and free coffee. We must overcome this challenge with creative marketing ideas like those I will use for you: 1. Use suite pictures that depict the unit as closely as possible by matching the specs to marketing material form this builder for this phase or an earlier phase or from resale units on MLS. Always point out the fact that it is a depiction and note key exceptions, like “your unit has real hardwood floors vs. the depiction’s laminate flooring. 2. Use floor plates (floor layouts) and building/site renderings with “Jing-captions” showing the location of the Suite in relation to the location of the building. This gives an idea of what the view/exposure will be like. Selling after Occupancy – When you can have Showings 1. Replace or substitute the creative pictures above with real pictures and videos including the views from the balcony. Upgrade all the marketing materials and media sites. 2. Stage the Unit – get more and better offers and save on Occupancy Fees with a faster sale. Costs - $1,000-$2,000 for first month and half that per month following. Please accept my $200 gift coupon presented after a successful sale. 3. Open Houses – depends on location, season and other factors

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Appendix B4 – Seven Exceptional Marketing Ideas that will help Sell Your Assignment “The Magnificent Seven” 1. Price competitively – a properly priced property is more than half sold. 2. Offer more than the usual Co-op Commission for resale – for example; 6% vs. 5%. 3. Offer an advance on the co-op commission: a. This compensates buyer agents who may be reluctant to bring their buyers to a Assignment sale since they normally have to wait until final closing to get paid (a much longer delay that with resales (6-12 mths vs 2-3 mths). b. It is paid out as an advance and does not add to the fees paid out in total. 4. Create an MLS listing sheet: a. TREB MLS has a tool to Add/Edit MLS Listings and save this as a Draft (without ever submitting/posting to MLS. b. Agents and potential buyers are accustomed to this format and this makes your listing more attractive and easier to appreciate. c. This form will be added to all marketing outlets and be downloadable on demand. 5. Use Walkscore to depict the attractiveness of the condo’s location in terms of distance to amenities and public transit. 6. Share your CMA (comparative market analysis) – prove the price/value. It convinced you of your condo’s current market value, let it convince others. A modified version can easily be created to conceal your market value vs list price gap. Use value ranges vs value points. Note: This makes it easier for the Buyer Agent since doing this work is part of what he/she should do for their client. 7. Summarize the dreaded Adjustments – make it as simple as possible for the buyer to understand the closing costs. No surprises and full disclosure is the best policy to get good offers that last the test of closing. Be sure to highlight any capping of adjustments on levies. See example of Adjustments, below: Appendix B5

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Appendix B5 â&#x20AC;&#x201C; Example of Assignment Closing Costs including Adjustments (paid by Assignee) The assignee will pay the following fees and costs as an example: a. Legal fees. About $1,200-$1,500 plus disbursements and title insurance, typically a total approaching $2,000. Lawyers will charge more (for justifiable reasons) for condo assignments vs. condo resale transactions. b. Land Transfer Tax (Ontario & Toronto) - calculator. Assignees will pay this tax on the new purchase price. For example, a $500,000 price would cost $12,200 (in Toronto, less if outside Toronto). First-time buyers get rebates on both Provincial and City tax (if applicable, of $2,000 & $3,725 respectively). Ask us about these. c. Levies. All new home or condo sales have levies associated with them. These include development, educational and utility levies (gas, hydro, sewage, etc.) that the builder will allocate to the unit owners at closing. This is specified in all new home builder contracts. Sometimes they are "capped", many times they are not. Typically, these levies are about $3,000-$5,000 at most. The builder can only pass through the actual costs and is not permitted to add profit or administration fees. Example: If the educational levy was $500,000 for your condo building and there was 200 units in your building, the levy would be $2,500 ($500,000/200). The builder usually notifies the unit owners of these cost 2-3 weeks before closing. d. Tarion Warranty Fee: based on the original purchase price net of all taxes including HST so will be based on an amount less than the original purchase price of $400,000, we have been using as an example on this page. I will use a simple formula to create the Net Price example: Gross Original Price (400,000) x HST Factor (100/113 (0.885) = $354,000. As per Tarion's warranty fee schedule, the fee would be about $880.00. e. HST Rebate. Often the builder will require this be paid back on assignment deals. If assignee is eligible for the rebate (owner occupancy or rented for at least 12 months) application can be made to get these monies back. Be warned: This amount can be up to $27,000 on condos valued above $400,000 (based on original purchase price). This applies to ALL new condo purchases, not just Assignments. f. Other Adjustments. Check the Agreement under "Adjustments" and definitely have these understood prior to closing. g. Condo Reserve Fund. Reserve Fund initial payments may be stipulated in the original builder's agreement. We have seen Builder contracts that stipulate a three-month condo fee be paid by the Buyer to "kick-off" the condo reserve fund. With condo fees ranging from $400 to

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$600 or more, this is something you want to be prepared for at closing. This is a non-refundable cost. h. Property Tax. Often required by mortgage/lender to create a reserve. Check with the lender. i. Insurance Costs (monthly). The assignee must purchase condo insurance to cover contents and public liability as per the terms of their mortgage. This is similar to renter's insurance but with condos there are a few extra issues that you should have covered. These include deductibles and special assessments - riders that we recommend you include (not required during the interim occupancy period). Premiums will be about $30$40 per month.

Total Costs: $9,000 - $11,000* (before first time buyer rebates on Land Transfer Tax(es). * Based on the example used of a $400,000 original purchase price and a $500,000 new purchase (assignment) price

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Appendix B6 â&#x20AC;&#x201C; Example of Assignment Closing Costs including Adjustments (paid by Assignor) The bulk of the closing costs are paid by the Assignee (see above). a. Realty Fees. The largest single cost for the Assignor. Fees are based on a percentage (%) of the new selling price of the unit plus HST. Example: $500,000 new purchase price x 6% = $30,000 + $3,900 HST = Total of $33,900. b. Legal fees. Seller fees are less than Buyer fees and typically range around $1,600.00. Note these are a bit less than what is paid for the Assignee. Same as with all real estate transactions - Buyers have more disbursements than Sellers, plus recommended title insurance. c. Property Tax Holdback. This is often required by the Assignee's lawyer to protect against underpayment of property taxes during the interim occupancy period since the unit was not yet assessed. Example: 6 months x $300/month = $1,800. Assignor's will get a "Statement of Adjustments and Costs from their lawyer several weeks prior to closing with all these costs determined so that you can be ready with a certified cheque for the amount owing.

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Appendix B7 – Summary of Assignment Costs Summary of Costs Based on these examples, your actuals may vary:   

Original Purchase Price: $400,000 New Purchase Price: $500,000 6 months occupancy period

Summary of Costs Assignment Fees: (often 1% of original purchase price) Assignment Deposit: ("soft cost" - held and returned) e.g.; 5% of New Price Interim Occupancy Deposit: (soft cost) could be paid by either side depending on timing of Assignment deal e.g.; 5% of Original Price Interim Occupancy Costs: based on 6 months - will vary Final Closing/Unit Transfer Date: Assignor: - Realty Fees, e.g. 6% (HST extra): - Legal Fees: Assignor Total: Assignor Total as % New Purchase Price: Assignee: - Legal Fees: - Land Transfer Tax (based on original purchase price!) (w/o rebates) - Adjustments (levies, advanced condo fees, mortgage fees, warranty, etc) - HST Rebate (may not apply and/or might be reclaimed later) Assignee Total: (excluding HST Rebate and soft costs)*: Assignee Total as % of New Purchase Price: Assignee Total as % of New Purchase Price including HST Rebate

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Assignor Assignee $4,000 $25,000* $20,000* $10,000

$30,000 $1,600 $36,000 6-7% $2,000 $12,000 $10,000 ($27,000)* $34,000 7% 12%

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Appendix C1 - Example of Form 150 - Schedule B – Distribution of Funds Assumptions: Total Purchase Price (before Cashback) Original Purchase Price

$358.000

Deposits paid by Assignor To Builder

$48,000 (4 x 5% x 320,000 = $12,000)

$320,000

Deposit paid by Assignee to Assignor Occupancy Deposit paid by Assignee to Builder

$20,000

Cashback

$5,000

$12,000

1. Total Purchase Price including the original Agreement of Purchase and Sale (Builder’s Agreement) and this Assignment Agreement: [before cashback, if applicable]

$358,000

2. Purchase Price of original Agreement of Purchase and Sale [Builder’s Agreement] as indicated in Schedule “C”: $320,000 3. Deposit(s) paid by Assignor to the seller (Builder) under the original Agreement of Purchase and Sale [Builder’s Agreement} as indicated in Schedule “C”, to be paid by the Assignee to $48,000 the Assignor as follows: Note: 1- 2 is the Assignor’s Gross Profit of $38,000 (the Builder neither knows nor cares $38,000 about this amount). The Builder just wants his balance owed plus adjustments. …………………………………………………………………………………………………………………………………………………………………. (Upon acceptance of this Assignment Agreement and receipt of consent to assign from the original seller [Builder], if applicable.) (Upon occupancy by the Assignee and receipt of consent to assign from the original seller [Builder], if applicable.) (Upon final closing of the original Agreement of Purchase and Sale [Builder] and this Assignment Agreement)

4. Payment by Assignee to Assignor for this Assignment Agreement: {Calculated from above: item 1 minus item 2 plus item 3] $358,000-$320,000+$48,000 =

$86,000

5. Deposit paid under this Assignment Agreement (in accordance with Page 1 of this Assignment Agreement or as amended by Schedule A and/or Schedule D, if applicable): 6. Balance of the payment for this Assignment [owed by the Assignee]: [Calculated from above: item 4 minus item 5] $86,000 - $20,000 = [The following is not part of the Standard Form 150 but will serve to reconcile with the Purchase Price of the Assignment Agreement] 7. Final Deposit to seller {Builder} at Interim Occupancy, paid by Assignee if applicable

$20,000 $66,000

$12,000

8. Add back Deposits in 3 above - $48,000 Add back Deposit in 7 above - $12,000 Add back Cashback - $5,000 9. Balance owed to seller {Builder} on Final Closing by Assignee {item 2 minus item 8. above $320,000 - $65,000 = 10. Profit on Assignment – item 1 – item 2

$65,000

11. Reconciled to Assignment Purchase Price – [item 2 + item 10} $320,000 + $38,000

$358,000

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$255,000 $38,000

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Appendix C2 - Simplified Example of Form 150 - Schedule B – Distribution of Funds What are we trying to accomplish with Schedule B of Form 150? Simply to account for all three parties to the Agreement – Assignor, Assignee and Builder for the funds owed and funds already paid (deposits & other credits like cashbacks). Assignor pays the Assignor back his deposit but gets credit for this by having the Builder Balance owed reduced by the same amount. In & out, so does not change the profit for the Assignor or the price of the condo. The Assignor gets paid his Profit ($38,000) and the return of his builder deposit ($48,000). Marketing tip: Not shown in the table below but the marketing price of the condo could/should be stated as net of cashback ($5,000) or $353,000 vs. $358,000 since the Assignee will get the cashback credit at closing thus the net price will be $353,000 as advertised. Payment or Credit Original purchase price Assignment Price Profit Deposit to Builder Amount Owed Assignor by Assignee Deposit on Assignment Balance Owed Assignor Final Deposit to Builder Cashback

Balance owed Builder Deposits & Credits Reconciled Amounts Deposit Net Paid

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Assignor $320,000 $358,000 $38,000 $48,000 $86,000

Builder $320,000

($48,000)

($20,000) $66,000 ($12,000) ($5,000)

$20,000 $86,000 ($48,000) $38,000

Assignee (Balances + Credits)

$20,000 $66,000 $12,000 $5,000 $103,000

$255,000 $65,000 $320,000

$255,000 $103,000

$320,000

$358,000

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Appendix D1 - Recommended Clauses for Form 150, Schedule A Builder Approval The Assignor and Assignee agree to execute the Builder/Vendor/Seller Consent to Assignment and related Amendment changing the purchaser’s name(s) from the Assignor to the Assignee forthwith provided that ,in the event of any discrepancy between these documents and this Assignment Agreement this Assignment Agreement shall govern. Confirmation of Deposits Assignor agrees to request at their cost, if any, a confirmation of deposits received by the Builder/Vendor from the Assignor up to the acceptance date of the Assignment Agreement and to provide this information to the Assignee by mail, fax or email attachment a copy of the confirmation document, fax or email provided by the Builder/Vendor/Seller. Assignment Fee Assignor agrees to pay the Assignment Fee, if any, to the Builder/Vendor/Seller as and when requested by the Builder/Vendor. {This is redundant to Form 150, clause 15}. Builder/Vendor/Seller Agreement Attachment Assignor agrees to deliver by mail, fax or email attachment, at their expense, a copy of the Builder/Vendor Agreement to the Assignee within two (2) business days (excluding Saturdays, Sundays and Statutory Holidays) after the Acceptance of the Assignment Agreement. Assignee Financial Disclosure Assignor agrees to provide financial disclosure to the Builder/Vendor/Seller if and as required to satisfy the terms of the Builder/Vendor/Seller Assignment Agreement and Consent. Clarification of term “Seller” Assignor and Assignee understand that the term “Seller” referred to in Assignment Agreement (Form 150) refers to the condominium current owner of the development, possibly otherwise known as the Builder/Developer/Vendor and is not referring to the Assignor. Clarifying Agreement of Purchase and Sale Assignor and Assignee agree and understand that the Builder’s Original Agreement of Purchase and Sale, attached as Schedule “C”, includes all and any duly accepted Amendments that may have been approved by the Assignor and the Builder/Vendor/Seller prior to this Assignment being accepted by the

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Builder/Vendor/Seller. Thus it is understood to mean: “as amended” whenever referred to in this Assignment Agreement. Switchover Date The Assignor and Assignee agree that the effective date of Assignment (the date the Assignee takes over the rights and obligations as the new purchaser, including but not limited to the right to occupy the unit) will be the later of: 1. The date of builder’s approval, or; 2. The date of _______________ 20___

Condition – Financing – eight days (assignment sales may require more time) THIS OFFER IS CONDITIONAL upon the Assignee arranging financing satisfactory to him within eight banking days (excluding Saturdays, Sundays and statutory holidays) from the date of acceptance of this Offer, failing which this Offer becomes null and void and the deposit money shall be returned to the Assignee in full without interest or deduction. This condition is included for the benefit of the Assignee and may be waived at his sole option by notice in writing to the Assignor or his agent within the specified time period. The said proceeds from financing shall be paid to the Assignor on closing as part of the purchase price. Condition – Lawyer (covers both the Assignment Agreement (negotiable) and the Builder Agreement (non-negotiable). THIS OFFER IS CONDITIONAL upon the approval of the terms hereof by the Assignee’s Solicitor. Unless the Assignee gives notice in writing delivered to the Assignor personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto within five banking days (excluding Saturdays, Sundays and statutory holidays) from the date of acceptance of this Offer, failing which this Offer shall be null and void and the deposit shall be returned to the Assignee in full without deduction. This condition is included for the benefit of Assignee and may be waived at the Assignee’s sole option by notice in writing to the Assignor as aforesaid within the time period stated herein.

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Appendix D2 - Understanding the provisions of Form 150

Standard Form 150 Provisions Assignment of Agreement of Purchase and Sale - Condominium To avoid unnecessary duplication of clauses in the Assignment Agreement the following provisions have been covered within this Agreement as standard and will stand unless replaced by clauses that have been added in Schedule “A or, Schedule “D” in the case of interest payable on deposits. Page 1 of 6 (not counting manually added pages to the document set) {Note: may be more than 6 pages: Schedule “C” - “Builder/Vendor/Seller Agreement of Purchase and Sale” and Schedule “D” – “Interest paid by Brokerage on Deposits” are attached but not in the page count inserted by WebForms®, if they are manually attached to the document set, unless you create this as a custom Schedule, form 105. DEPOSIT: Assignee submits (Herewith or Upon Acceptance). Deposit Holder is specified (e.g.; listing brokerage or assignor’s lawyer). Negotiable Cheque {may want to use the clause to change this to certified cheque or money order or efunds} Assignee to deliver to the Deposit Holder {as specified above} within 24 hours with no interest being earned received or paid on the deposit. {Note: may want to change this to 48 hours depending on Assignee’s ability to access funds} Page 2 of 6 (paragraph) (2) ASSIGNMENT: The Assignor agrees to grant and assign to the Assignee, forthwith all the Assignor’s rights, title and interest in, under and to the Agreement of Purchase and Sale attached hereto in Schedule “C”. (3) ASSIGNEE COVENANTS: The Assignee hereby covenants and agrees with the Assignor that forthwith upon the assignment of the Agreement of Purchase and Sale it {Note: error?} will assume perform, comply with and be bound by , all obligations warranties and representations of the Assignor as contained in the Agreement of Purchase and Sale as if the Assignee had originally executed the Agreement of Purchase and Sale as a buyer with the Seller. {Note: Assignee “steps into the shoes” of the Assignor} 1/30/2014

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(4) ASSIGNOR COVENENTS: The Assignor covenants and represents that: (a) The Assignor has full right, power and authority to assign the prior Agreement of Purchase and Sale attached (the “Agreement of Purchase and Sale “) {as amended} and the Assignor’s interest in the; property; (b) The Agreement of Purchase and Sale attached hereto as Schedule “C” is a full and complete copy thereof and has not been amended, supplemented, terminated or otherwise changed in any way and is in good standing and has not previously been assigned. {Note: highlighting added by author - use clause on clarification to override “not been amended” as these Agreements often are amended and to override “not previously assigned” if this is a re-assignment situation} (c) The Assignor will not amend the Agreement of Purchase and Sale without the Assignee’s prior written consent {Note: may want to substitute this part with a clause that adds that “consent will not be reasonably withheld.” } (d) After acceptance of this Assignment Agreement until the earlier of termination or completion of the Agreement of Purchase and Sale attached hereto as Schedule “C”, the Assignor will not further assign the Agreement of Purchase and Sale. (e) Neither party to the Agreement of Purchase and Sale (Schedule C) has done any act in breach of the said Agreement of Purchase and Sale or committed any omission with respect to said Agreement of Purchase and Sale (8) INSPECTION: Assignee acknowledges having had an opportunity to inspect the property or the plans and documents for the property to be constructed and understands that upon acceptance of this offer there shall be a binding Assignment agreement between Assignee and Assignor. {Note: the key conjunctive word “or” meaning that one or the other will do and thus if no inspection was possible which is often the case, or was not done by the Assignee than the provision of plans and documents as provided in the original Agreement of Purchase and Sale will suffice.} Page 3 of 6 (paragraph) (11) ADJUSTMENTS: Any rents, mortgage interest, realty taxes, including local improvement rates and metered public or private utility charges and unmetered cost of fuel, as applicable shall be apportioned and allowed to the day of completion, the day of completion itself to be apportioned to the Assignee.

(15) APPROVAL OF THE AGREEMENT:

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In the event that the consent to this Assignment is required to be given by the seller in the Agreement of Purchase and Sale attached hereto in Schedule C, the Assignor will apply, at his sole expense of the Assignor, forthwith for the requisite consent, and if such consent is refused, then this agreement shall be null and void and the deposit monies paid hereunder shall be refunded without interest or other penalty to the Assignee. (17) DEFAULT BY SELLER [NOTE: Seller is the Builder} The Assignor and Assignee acknowledge and agree that if this Assignment Agreement is not completed due to the default of the seller for the Agreement of Purchase and Sale (Schedule C) that is the subject of this Assignment, the Assignor shall not be liable for any expenses, losses or damages incurred by the Assignee and this Assignment Agreement shall become null and void and all moneys paid by the Assignee under this Assignment Agreement shall be returned to the Assignee in full without interest. Schedule “A” - Page 5 of 6 (could be more pages if Schedule A is more than 1 page) Recommended clauses and conditions Schedule “B” - Page 6 of 6 (could be more pages if Schedule A is more than 1 page) “Calculation of funds for this Agreement” {Note : referred to on page 1 of 6 as “attached hereto form(s)” and referenced just below the date line on this Schedule} Schedule “C1” - many pages (see below) Builder/Vendor/Seller Agreement of Purchase and Sale {Note: Often delivered as a separate document set from the other six or seven pages of the set of Form 150 because of its sheer size. The copy provided by the Builder/Vendor/Seller can range from 30-40 pages with many two-sided pages and often copied to one-sided pages for easy of faxing or scanning and this increasing the number of pages } Schedule “C2” – many pages Declaration, Disclosure, By-Laws and Rules as per the condominium act. Schedule “D” - extra page (manually attached to the basic Form 150 set of six pages or can be added via Webforms® or its like, by creating a Schedule “D” there) Interest paid by brokerage on deposits. 1/30/2014

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