Your Buyer Wants to Assign the Purchase Agreement to Someone Else: What Ontario Resale Sellers Need to Know

Most sellers assume they can just say no. Under the standard OREA agreement, you often can’t. Here is the thing you actually can, and should, protect.

I am Arthur Zhao. This is not about pre-construction assignments — the builder-consent-fee, Tarion, anti-flipping world has its own articles. This is about a moment plenty of resale sellers walk into with nobody having warned them: the house is sold, the agreement is signed, and before closing your buyer says, “I want to hand this contract to someone else.”

Most sellers react with “absolutely not.” Understandable — but it rests on a wrong assumption: that you hold a veto by default. Usually you don’t. What follows is a plain map of the cards you actually hold, the risk you should actually worry about, and the one line you should actually refuse to cross.

What “I want to assign the agreement” is actually asking of you

Set the scene. Your home is sold, the Agreement of Purchase and Sale is signed by both sides, the deposit is in, and everyone is waiting on closing. In between, your buyer’s situation changes — a job relocation, a family event, a cash-flow squeeze, or simply a chance to pocket a spread — and they no longer want to, or cannot, complete the purchase themselves. So they find a third party to step in and ask whether they can assign.

The first thing to unlearn: what they are handing over is not the house — it is the contractual right to buy your house at the agreed price. Title has not moved; they own no property to sell you. All they can pass along is the right to stand in the buyer’s shoes and complete on your terms. The new buyer takes that right, and at closing title transfers from you straight to that new buyer.

The second, more dangerous assumption is that this needs your blessing. Whether it does depends entirely on what your particular agreement says — which is the next section.

One word apart: assignment vs novation

Why the standard OREA Form 100 gives you no veto

This is the most counterintuitive point, and the one worth getting right.

The general rule in Ontario contract law is that a contract that does not prohibit assignment, and is capable of being assigned, can be assigned without the other party’s consent (a settled common-law principle). And per real estate firm Cohen LLP’s review of resale assignments, the standard OREA Agreement of Purchase and Sale (Form 100) does not prohibit assignment, so it may be assigned without the seller’s consent. New builds are the opposite: builder agreements almost always say the deal cannot be assigned without the builder’s written consent, and usually charge a fee for it. The standard resale form carries no such layer of protection.

Put bluntly: if your veto is not written into the contract, it does not exist. If you want one, it has to be negotiated in before you sign — a clause such as “this agreement may not be assigned without the seller’s written consent.” Once the deal is signed on the standard form without that line, discovering later that your buyer wants to assign usually leaves you with little leverage to block it.

(A caveat: agreements vary enormously. Some add an assignment-restriction clause; condos and co-ops may have their own rules. What I am describing is the default position of the standard pre-printed form — have your lawyer read your actual agreement line by line.)

Before you agree, ask these four questions

Even where the contract gives you no hard veto, when the buyer needs your cooperation — signing a consent, or redirecting the closing to a new name — you still have room to vet and negotiate. Before you agree, pin down these four:

• Can the new buyer actually close? This matters most. Because it is an assignment, the original buyer stays liable — but the last thing you want is to reach closing day, find the new buyer short of funds, and be forced into litigation to chase the original one. Ask to see the new buyer’s financing or proof of funds.
• Whose deposit is it, and has it moved? Confirm the original buyer’s deposit travels with the contract to the new buyer and remains security for the deal — not refunded or shuffled away, quietly shrinking your protection.
• Do the closing date, price, and terms stay the same? A true assignment is the same contract with a different buyer — price, closing date and conditions unchanged. The moment the other side uses the assignment to move the closing date or rework terms, that is no longer a simple assignment, and you can say no.
• Is anyone asking you to “release the original buyer”? That phrase is the red line. Consenting to an assignment is not consenting to let the original buyer go (that is the novation above). Anything asking you to sign away the original buyer’s liability — stop and call your lawyer.

Land transfer tax in an assignment chain: why it can blow up your closing

The headline first: land transfer tax is always paid by the buyer, never by you as the seller. So why should a seller care? Because a tax nobody can pencil out is a tax that leaves your house failing to close.

On the mechanics, per Ontario Ministry of Finance guidance on section 3 of the Land Transfer Tax Act: the tax is not charged only when title is registered. A disposition of a beneficial interest in land can be taxed as if it were a registered conveyance, even with nothing registered. But s.3(1)(g) provides a shelter: until the buyer pays the consideration or assumes liability for it (generally, until closing), the beneficial interest arising from the purchase agreement — and any later assignment of it — is temporarily excluded from tax. So a normal, pre-closing assignment does not, by itself, immediately trigger a separate land transfer tax.

The risk hides in two places. First, per the Ministry, the definition of consideration is broader than the contract price — when the assignee completes, the tax base can include not just the original price but the assignment premium the new buyer paid to step in. Second, once someone mid-chain actually pays consideration or assumes liability and drops out of that shelter, the same land can attract tax more than once along the chain.

What this means for you as seller is direct: the more layered the assignment, the more the tax base can exceed what the new buyer expected. And a new buyer who cannot pencil out — and pay — that tax at the wire is a source of failed closings. Which is why, before you cooperate, it is worth making the other side show they (and their lawyer) have the tax figured out.

If you do cooperate, what the consent must nail down on paper

Say the new buyer checks out and you are willing to cooperate. When it goes to paper, do not just sign a vague “I consent to the assignment.” Get these written in (or have your lawyer write them in) to actually hold your position:

• State that this is an assignment, not a novation: the original buyer’s liability continues and is not released. This is your single most important stake.
• Price, closing date and all terms stay unchanged — the assignment is not a doorway to renegotiation.
• The original buyer’s deposit carries into the contract and remains security.
• Your closing documents and lawyer-to-lawyer dealings stay with the original buyer (or their lawyer); the original buyer directs title to the new buyer at closing (the way lawyers typically handle it).
• If commission arrangements are in play (who pays, and to whom), spell them out in the paper too, so no one disputes them at closing.

Ontario does have a standard assignment form (OREA Form 145), but do not expect a standard form to carry all of a seller’s protections — have your own real estate lawyer vet it.

When to just say no

In a few situations my advice is to decline rather than force a yes (assuming your contract does give you room to vet, or the other side needs your signature to cooperate):

• They ask you to “release the original buyer.” That quietly turns an assignment into a novation — refuse, or get your lawyer first.
• The new buyer’s financing is clearly shaky and no proof of funds is forthcoming. You would be gambling your own closing.
• They use the assignment to change the closing date, price, or terms. That is not an assignment; it is a renegotiation.
• There are signs of a chain (the contract passing through several hands) — the tax and closing complexity spike; get your lawyer involved.
• The paper in front of you is confusing and you are being rushed to sign. Any assignment that pressures you to sign before your lawyer has read it deserves suspicion.

Arthur Zhao

Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS

VP & Branch Manager, Bay Street Group Inc.

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