Why do some condo builders include 'no assignment' clauses and can they enforce them?

Some Ontario new-construction purchase agreements contain clauses that prohibit the buyer from assigning the agreement at all, or that prohibit assignment until a specified milestone (such as the condominium project being at least a certain percentage sold or construction reaching a certain stage). These clauses are generally enforceable as written because they are contractual terms the buyer agreed to when signing.

Builders include no-assignment or restricted-assignment clauses for several reasons. They may want to prevent speculative buying and resale that could affect project pricing and presales. They may want to avoid dealing with unknown purchasers mid-project. Some builders also receive revenue from consenting to assignments and want to control that process.

If your agreement prohibits assignment, attempting to assign anyway — or completing what amounts to a covert assignment through a corporate vehicle or similar structure — is a breach of contract and carries serious legal risk, including potential termination of the agreement and loss of deposit.

If you are considering a pre-construction purchase and may need flexibility to exit before closing, review the assignment provisions carefully before signing. Ask your lawyer whether the restriction is absolute or only conditional, and whether there are exceptions for death, family breakdown, or job relocation. If the restriction is too limiting and the project does not otherwise suit you, choosing a different project may be the best option.