- A default generally occurs when a party fails to meet an obligation the assignment agreement requires — most commonly, failing to close on the scheduled date, or failing to satisfy a…
- If the assignee — the buyer of the assignment — fails to close, the assignor is generally left holding both their original obligations to the builder and a failed sale.
- If the assignor fails to complete the assignment — for example, by refusing to close or breaching a term of the agreement — the assignee’s available remedies also depend on the…
Most condo assignment deals close without incident, but not all of them do. When either the assignor — the original purchaser selling their rights — or the assignee — the buyer taking them over — fails to complete the deal, the consequences depend on general Ontario contract law principles and on the specific terms of the assignment agreement itself.
This article explains, in general terms, what remedies are typically available when an assignment default occurs, and why the specific wording of your agreement matters more than any one-size-fits-all rule.
What Counts as a Default
A default generally occurs when a party fails to meet an obligation the assignment agreement requires — most commonly, failing to close on the scheduled date, or failing to satisfy a condition the agreement made a precondition to closing. What specifically counts as a default, and what happens next, is set out in the assignment agreement itself, so the exact consequences vary deal to deal.
If the Assignee Defaults
If the assignee — the buyer of the assignment — fails to close, the assignor is generally left holding both their original obligations to the builder and a failed sale. Depending on the agreement, the assignor may be able to:
- Retain the assignee’s deposit as compensation, if the agreement provides for this
- Pursue the assignee for damages flowing from the failed closing
- Attempt to re-market and re-sell the assignment to a new buyer, subject to the builder’s consent process starting again
If the Assignor Defaults
If the assignor fails to complete the assignment — for example, by refusing to close or breaching a term of the agreement — the assignee’s available remedies also depend on the agreement’s wording, but can generally include:
- Recovering their deposit
- Pursuing a claim for damages
- In some circumstances, seeking a court order for specific performance, requiring the assignor to complete the deal — though this remedy isn’t automatic and courts apply it selectively
General Contract Remedies at Play
| Remedy | What it means | When it’s typically available |
|---|---|---|
| Deposit forfeiture or return | The non-defaulting party keeps or recovers the deposit | Governed by the specific agreement’s terms |
| Damages | Compensation for financial loss caused by the default | Available under general contract law when a breach causes provable loss |
| Specific performance | A court order requiring the defaulting party to complete the deal | A discretionary remedy courts apply selectively, not a guaranteed outcome |
| Termination | Ending the agreement and releasing both parties going forward | Depends on the agreement’s default provisions |
These are general contract law concepts, not assignment-specific rules — the same categories of remedy come up across many types of Ontario real estate agreements when a party fails to close.
Why the Builder’s Position Matters Too
Because an assignment sits on top of the assignor’s original agreement with the builder, a default between assignor and assignee doesn’t necessarily affect the assignor’s separate obligations to the builder — the assignor may still owe the builder if the assignment falls through and no substitute buyer is found in time. This is one of the reasons a failed assignment can be more consequential for the assignor than a failed resale would be for an ordinary seller.
Reducing Default Risk Before You Sign
- Have your lawyer review the default and remedy provisions in the assignment agreement before you sign, not after a problem arises
- Confirm in writing what happens to deposits specifically, rather than relying on assumptions
- Understand the assignor’s continuing exposure to the builder if the assignment doesn’t close
- Keep financing arranged and confirmed well ahead of the closing date to reduce the risk of being the defaulting party
Frequently asked questions
Can an assignor be forced to complete an assignment sale?
In limited circumstances, a court can order specific performance, but this isn’t automatic — courts weigh the circumstances and often award damages instead. Whether it’s a realistic remedy depends heavily on the specific facts and the assignment agreement’s terms.
Does the builder get involved if an assignee defaults?
The builder isn’t typically a direct party to the assignment agreement between assignor and assignee, but because the builder’s consent and the underlying original agreement remain relevant, a failed assignment can still affect the assignor’s standing with the builder. Speak with your lawyer about how your specific agreement addresses this.
What should I do first if I think the other party is going to default?
Contact your lawyer as soon as you have concerns, rather than waiting for the scheduled closing date to pass. Early legal advice preserves more options than waiting until after a default has occurred.
Is losing a deposit the worst-case outcome in an assignment default?
Not necessarily — depending on the agreement and the circumstances, a defaulting party could also face a claim for damages beyond the deposit amount. The deposit is often the starting point, not the ceiling, of potential exposure.
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