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Agent: Assignment clauses aren’t entirely unethical

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Real Estate Professional | 07 Mar 2016, 08:15 AM Agree 0
Are assignment clauses as big a deal as they’re being made out to be? One Realtor weighs in
  • Robert | 07 Mar 2016, 10:48 AM Agree 0
    The unethical part is the fact that most people making a profit aren't claiming the income on taxes. The one who assigns it after purchasing, never even gets title to the property, makes a significant profit and then just stuffs the $$$ in the bank.
  • Oscar Vidal-Calvet | 07 Mar 2016, 11:23 AM Agree 0
    We as realtors, sell and buy real estate on behalf of our clients. Every transaction we do is registered at our brokerage and therefore we pay taxes on our income and that is the way to be.

    If our clients are the purchasers of real estate having within their "Agreement of Purchase and Sale" the ability to sell the property, and they decide to exercise this right before the transaction legally "closes" (Assignment Clause), are supposed to disclose the sale of the "Agreement of Purchase and Sale", and therefore they'll be taxed with "Capital Gains" or the corporate tax if the purchase is taken as inventory . But so far as long as proper disclosures are made, and taxes are paid I see no wrong.

    On the other hand, some people may think that prices are going high because of this practice (above explained), but I really think that the main cause is that "Non Residents or Foreign Investors" may be speculating with real estate and then the legalities in these cases should be changed (per example), for a much higher "Land Transfer Tax" to be applied to this kind of purchasers.
  • RobertD | 07 Mar 2016, 12:42 PM Agree 0
    Selling agreement of purchase (assignment) for a profit is considered business income, which is taxed at twice the rate of capital gains.
    It is not different when selling stocks or art.
    Anorher point that realtor should properly disclosure his/her interest in this transaction to the seller and the buyer.
  • Navtaj Chandhoke | 07 Mar 2016, 12:56 PM Agree 0
    Assignment Clause is one of the basic tool Professional real Estate Investors Group (PREIG) Canada members use all across Canada for quick flipping as well as asset protection.There is no problem with that.The unfortunate part is shadow flipping have caused lot of bad press.

    As long as taxes are concerned, some real estate investors use as business income.The media have brought lot of attention to few crocked Realtor where the sellers were kept in the dark.Let us face it.Canada is free capital society.Every investor end up flipping their investment properties sooner or later.You can learn more at
  • RE Investor | 07 Mar 2016, 01:09 PM Agree 0
    This article is very unclear. It seems that it will only add more confusion for people.
    Cases in point:
    1. Title is misleading. There is nothing unethical about assignment clauses. They are part of English Common Law for contracts.
    2. "In some cases the property is transferred to the buyer’s agent who then re-lists the home at a higher price." - "Transferred" is ambiguous. If the buyers agent purchases the property, then they are free to relist. And if they can get a higher price then good for them. The sellers' agent should get the highest possible offers for the seller.
    3. "The seller can always back out of the deal" - not true if the contract is signed. A RE purchase agmt is an option agmt. The seller is obligated to sell as long as the terms of the contract are met, whether by the buyer or its assignee, per the contract.

    Obviously, if an agent or buyer is misrepresenting anything, that is unethical. But the assignment clause itself is no more unethical than a purchase contract or a deed. It's how one uses these contracts that is the issue.

    Please use clear language and better reporting for such controversial issues.

  • judy | 14 Mar 2016, 02:02 PM Agree 0
    While I can see how this would appear un-ethical, real estate is just a commodity. Do we insist that the wholesale purchase price for any commodity be disclosed to the end purchaser at Walmart? McDonald's? SuperStore? PawnShop?The buyer pays the going rate or walks out the door with his $ to the competition. It is just the amount of $ that is involved that gets the public upset. Will they feel sorry for the investor who is left holding the bag at the end like in 1981????? I don't think so....
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