Blog > The Pre-Construction Assignment Clause Costing Markham Buyers $250,000
The Pre-Construction Assignment Clause Costing Markham Buyers $250,000
One buyer just lost $250,000 in court because of a clause buried on page 47 of her Markham pre-construction Agreement of Purchase and Sale (APS). Don't sign yours until you understand what's really at stake.
The $250,000 Mistake Hidden in Plain Sight
In the rush to secure a unit in Markham's booming pre-construction market, most buyers focus on the floor plan, the view, and the deposit structure. But the real danger lies in the fine print — specifically, the assignment clause.
The Precedent: The landmark case of Mattamy Homes v. Ishola (2024) set a shocking precedent. A buyer was ordered to pay $190,000 in damages plus forfeit a $60,000 deposit — totaling $250,000 — simply for attempting to assign their pre-construction contract without strict adherence to the builder's restrictive terms.
The Reality: With over 60 active pre-construction projects in Markham and the massive 2,052-unit Cornell community coming online along Highway 7, assignment questions are exploding. Yet, most buyers don't realize that "assigning" your contract isn't a right — it's a privilege that builders can revoke or penalize heavily.
What Is an Assignment Clause?
An assignment clause allows you to sell your pre-construction contract to another buyer before the building is completed and registered. This is a common strategy for investors looking to capitalize on appreciation during the construction phase. However, builders include strict conditions to control this process.
Typical restrictions include:
- Builder Approval: The builder must approve the new buyer, often charging an administrative fee ranging from $1,500 to $5,000.
- Marketing Restrictions: You cannot advertise the unit for sale on public platforms like MLS, Realtor.ca, or social media without explicit permission.
- Price Caps: Some clauses limit the profit you can make on the assignment, requiring you to share a percentage with the builder.
- Timing Limits: Assignments may only be permitted during a specific window (e.g., after 50% of units are sold but before occupancy).
⚠️ The "No Public Marketing" Trap
The most common violation is listing the unit on public websites. Builders argue this undermines their own sales efforts. If caught, they can terminate your contract, keep your deposit, and sue for damages — exactly what happened in the Ishola case.
Why This Matters More in 2026
The Markham pre-construction market is shifting. With interest rates stabilizing but remaining higher than the 2020–2021 lows, some early investors are looking to exit their contracts before closing. This surge in assignment attempts has made builders more aggressive in enforcing these clauses.
Markham currently has over 60 pre-construction developments, creating a complex web of varying assignment policies.
The upcoming Highway 7 community will flood the market with inventory, potentially impacting assignment profitability.
Courts are increasingly siding with builders who clearly outline assignment restrictions in the APS.
Assignments can trigger unexpected HST liabilities if not structured correctly, adding thousands to your costs.
The 12 Red Flags to Check Before You Sign
Before you sign any pre-construction APS in Markham, review these 12 critical clauses. If any are missing or unclear, consult a real estate lawyer immediately:
- Assignment Fee: Is there a fixed fee? How much is it?
- Approval Process: What are the criteria for builder approval of the new buyer?
- Marketing Rights: Can you list on MLS? Can you use social media?
- Profit Sharing: Does the builder claim a % of your assignment profit?
- Timing Window: When exactly can you assign? Is there a blackout period?
- Termination Rights: Can the builder cancel your contract if you violate the clause?
- Deposit Forfeiture: What happens to your deposit if the assignment fails?
- HST Responsibility: Who pays the HST on the assignment sale?
- Legal Costs: Are you responsible for the builder's legal fees during the assignment?
- Occupancy vs. Title: Can you assign after occupancy but before final title registration?
- Buyer Qualification: Must the new buyer meet the same financial criteria as you?
- Exclusivity: Does the builder have the right of first refusal to buy back the unit?
(Damages + Deposit)
Projects in Markham
to Review
How to Protect Yourself
Don't rely on the sales representative's verbal assurances. Everything must be in writing. Here's your action plan:
- Hire a Real Estate Lawyer: Before signing, have a lawyer specializing in pre-construction reviews your APS. The $500–$1,000 fee is cheap insurance against a $250,000 loss.
- Negotiate the Clause: While builders are often rigid, some may allow more flexible assignment terms if requested early in the sales process.
- Document Everything: Keep records of all communications with the builder regarding assignment permissions.
- Understand the Tax Implications: Consult with a CPA to understand how HST and capital gains apply to your specific assignment scenario.
Don't Sign Until You Read The Checklist
Comment PRECON below or DM me 'PRECON' and I'll send you my Markham Pre-Construction Red-Flag Checklist — the exact 12 clauses you need to negotiate before you sign. Or, book a 15-minute strategy call to discuss your specific project.
🏆 Michael John Lau — Awards & Recognition
Michael John Lau is a licensed REALTOR® serving buyers and sellers in Markham, Ontario and the Greater Toronto Area. This article provides general information about pre-construction assignment clauses and does not constitute legal advice. The Mattamy Homes v. Ishola case is cited for illustrative purposes. Always consult with a qualified real estate lawyer and tax professional before signing any pre-construction agreement or attempting an assignment. Not intended to solicit clients currently under contract with another brokerage.
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