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Updated almost 3 years ago on . Most recent reply

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7
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1
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Sarthak K.
1
Votes |
7
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Can I back out from Assignment sale?

Sarthak K.
Posted

Hello experts,

So I think I have made a really bad investment. At the height of market frenzy in Ontario, I bought into an assignment sale of a 2bed condo in early 2022. The tentative date of occupancy at that time was June 2022. Now that builder agreement has been signed, 2 things have happened- interest rates have gone up which have probably decreased the market value of this condo from what I paid for it; secondly, we have a labour union strike in Ontario due to which my occupancy date is in spring 2023 now😱. 

I don’t seem to have any option but to wait for occupancy by which time my condo will probably be worth $100k less due to rising interest rates. 

So my question is - I cannot back out from this builder agreement without losing money, can I? I already paid the deposit to the builder/assignor?


another question- can the builder ask me for more money because their material and labor costs have gone up?

Also, I am already paying 20% for this property (I am a first time home buyer). Would anyone recommend that I pay even more 30% or so to keep my monthly payments less now that interest rates have risen?

For new condos, how long should one keep them before they become less attractive in the market?
 

Any advice would be greatly appreciated. 

Most Popular Reply

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318
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Stevo Sun
  • Calgary, AB
171
Votes |
318
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Stevo Sun
  • Calgary, AB
Replied

That's rough, but I think it comes down to a math question... If you think the property is now worth 100k less than what you are buying it for, is that more than your deposit? If your deposit is a lot less than 100k it might be better to just lose the deposit. I think it also really depends on your financial situation and your goals. 

Do you have any conditions on the agreement? Financing or something like that you can use to back out of? I think you have a few options, but none of them are great.


1) lose the deposit if it's a lot less than the property value drop (ie. losing like a 30k deposit vs overpaying for something by 100k, you would still be better off by 70k)

2) if you can afford to stick it out and it's something you like/want to live in then you might consider holding it

3) you can try to drag out the amortization from like 25 to 30yrs to lower your monthly payments


I'm sure there are other solutions out there that people with more experience than me can come up with. Good luck!

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