Agent: Assignment clauses aren’t entirely unethical

by Justin da Rosa07 Mar 2016
Are assignment clauses as big a deal as they’re being made out to be? One Realtor weighs in.

“(Assignment clauses) are not unethical if they're being disclosed, and as long as someone knows the whole story and what the Realtor is getting out of it,” Mitch Collins, an agent with Century 21 in British Columbia, told REP. “It’s a free market (and buyers and sellers) can decide what they want to do.

“A seller can back out of the deal.”

Assignment clauses allow buyers to transfer his or her interest in a property to a third party prior to the closing date. In some cases the property is transferred to the buyer’s agent who then re-lists the home at a higher price.

After a Globe and Mail report surfaced about the prevalence of assignment clauses in British Columbia’s housing market, the province’s real estate board has stepped in and promised action.

The Real Estate Council of British Columbia has announced an advocacy group that will be tasked with examining licensee misconduct.

And while some industry players may argue the practice isn’t inherently unethical, issues do arise when agents fail to disclose the practice to clients.

“The reason the practice has become a big issue is the fact that it’s not always being disclosed as well as it should be,” Collins said. “If the right disclosure isn’t given it opens up the Realtor to a lawsuit."

Agents obviously have their opinions about the practice, but what do average Canadians think?

recent study by Angus Reid, which included over 6,000 Canadians, found that 33% of respondents find the practice “entirely unacceptable – basically a dishonest scam.” 32% view the practice as “generally unacceptable.” 32% believe it to be “generally acceptable,” and a mere 3% said it was “entirely acceptable” because “this is how things work in our business world.”


  • by Robert 3/7/2016 10:48:08 AM

    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.

  • by Oscar Vidal-Calvet 3/7/2016 11:23:49 AM

    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.

  • by RobertD 3/7/2016 12:42:23 PM

    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.

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