Assignment sales are legal, so what’s the problem?

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VANCOUVER (NEWS 1130) – The idea of assignment sales in the real estate market is perfectly legal in BC, so why is everyone up in arms over it?

Assignment is when person A sells to person B, who re-assigns the contract to person C for a higher price.

Bell Alliance Lawyer Khushhal Bains doesn’t believe that there are a lot of realtors acting unethically. “Situations where people are encouraging their clients to accept prices that aren’t the best price.”

Instead, he thinks in many cases home values simply go up while waiting for a sale to close.

“In my own personal experience and experience in the office, it seems like people are getting the best price at that time. The challenge is if two or three months later, the prices have gone up by 10 per cent of hundreds of thousands of dollars, it’s not necessarily the case that the realtors are being unethical. It’s that two months later the price is legitimately a hundred and fifty grand higher,” explains Bains.

UBC Professor Tsur Sommerville says assignment is something that’s very common and there’s nothing illegal about it. He feels the whole issue is the ethics around the realtor and whether he or she is representing the client properly.

“I think they have a reason to be concerned if there are people they are trusting to act in their best interest and essentially if not criminally defrauding them, at least ethically taking advantage of them,” says Sommerville. “If you think you’re making the sale to the highest or best value and your realtor is in cahoots with somebody to take advantage of you, I think that’s something to definitely be concerned with.

Sommerville says there are certainly legitimate reasons for properties to be assigned.

“Somebody changed their mind about occupying and decided to sell rather than back out of the deal and lose the deposit. Certainly when you look at pre-sales, people buy pre-sale contracts and sell those and buy those as part of an investment strategy.”

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