Not helping matters is the fact that a considerable number of consumers have raised concerns about being ripped off by unscrupulous industry players.
“The council has become aware that some licensees may be engaging in business practices that are contrary to their clients’ best interests,” B.C. Real Estate Council communications officer Marilee Peters said in a statement on Monday (February 8), as quoted by MoneySense.
To help would-be buyers and sellers avoid legal pitfalls, the Council has encouraged the public to report offenders. In addition, real estate resource CanadaRealty.org outlined some fraud-prevention tips for those who would like to enter in such an arrangement:
- Among the most important steps are to secure a copy of the agreement of purchase and sale held by the builder, and to determine the type of assignment agreement to be used. Setting the original and new purchase prices as well as the occupancy payments is also crucial to avoid any financial missteps.
- The buyer/seller also has to determine the status of construction along with the interim occupancy and the final closing dates. Identifying the responsibilities of the people involved, from the agents to the legal representatives, would help streamline the sale as everyone would be aware of whom exactly to approach at a particular stage.
- Who would pay for the builder’s closing costs, and who would receive the credit for interest on already-paid deposits? Who would be responsible for the non-residency/withholding taxes? Knowing the answers would make the final parts of the transaction much easier for the buyer/seller.
Assignment sales, wherein properties are sold and resold, have seen increased popularity in Canada and many other markets worldwide. While it has proven to be attractive for enterprising sellers and realtors, however, it has also raised allegations of fraud among its practitioners.