Published 11 September 2026 · By Jatin Dua, Broker of Record, RE/MAX Quantum Realty
An assignment clause lets your buyer transfer their contract rights to someone else before closing, but the right to assign and a release from liability are two different things. ASSIGN-1 (Right to Assign Agreement) is the buyer-side version and it pairs the assignment with a covenant running from the new buyer to the seller, which is what makes the release meaningful. ASSIGN-2 (Right to Assign – Seller’s Consent) is the seller-side version and it bites on marketing the contract, not just on transferring it. The mistake I see most often is an agent writing “and/or assignee” on the buyer line and telling the client they can walk away once they find someone else. They cannot.
Two clauses, two opposite jobs
The assignment category in the OREA clause guidelines is short. It is two clauses, and they point in opposite directions, which means the drafting decision is made the moment you know whose side of the table you are sitting on.
ASSIGN-1 (Right to Assign Agreement) is written for the buyer. It gives the buyer the ability to put someone else into the contract before completion, and it does two things that a bare right of assignment does not: it requires notice to the seller, and it requires whoever steps in to promise the seller directly that they will perform the buyer’s side of the bargain. The release of the original buyer is tied to those two steps happening.
ASSIGN-2 (Right to Assign – Seller’s Consent) is written for the seller and is broader than its title suggests. It does not only restrain transferring the contract. It restrains renting, listing, advertising and otherwise dealing with the buyer’s contract rights, and it makes the seller’s consent discretionary rather than something the buyer can argue is being unreasonably withheld.
Pull both from your own OREA member copy before you draft. The codes are your index; the wording is theirs, and this post deliberately does not reproduce it.
The short version
ASSIGN-1 is a buyer’s tool for exit and flexibility. ASSIGN-2 is a seller’s tool for control over who ends up on the other side of the deal and over whether the contract gets marketed at all. You do not negotiate both into the same schedule and hope nobody notices.
Assigning is not the same as getting out
This is the expensive misunderstanding. An agent tells a buyer that because the agreement is assignable, the buyer can hand the deal to a friend and be finished with it. Then the friend does not close, and the seller sues the original buyer.
Think of it as two separate moves. Move one transfers the benefit of the contract — the right to receive the property. Move two transfers the burden — the obligation to pay and to complete. The first can be done between the buyer and the assignee. The second involves the seller, because you cannot make a stranger the seller’s debtor without the seller’s involvement, and you cannot discharge the original buyer’s promise without something that operates as a release.
That is exactly why ASSIGN-1 is structured the way it is. A promise running directly from the incoming party to the seller is what makes the substitution real. The notice is the trigger. Skip either step and your buyer may have transferred the upside while keeping the liability, which is the worst of both.
Whether an agreement that says nothing about assignment is assignable at all, and what the effect of a partial assignment is, are questions of contract law. They are for the client’s lawyer, not for you, and not for a blog post. What you can do is make sure the agreement is not silent.
ASSIGN-2 catches the marketing, not just the transfer
When a seller’s client tells you they do not want their deal showing up on the board as an assignment sale, ASSIGN-2 is the clause that addresses it. The restraint reaches advertising and listing the contract, which is a different act from actually transferring it.
That matters in pre-construction and in any market where a buyer’s real business model is resale of the paper. If your seller is a private owner selling one house, they usually care about certainty of closing. If your seller is a builder, the concern is different — they care about controlling their own inventory and pricing, and a builder’s own agreement will have its own assignment machinery that will sit on top of anything you write. Read the builder’s document; do not assume the OREA clause governs.
There is a companion clause worth knowing here. DEV-4 (Intention of Buyer to Develop) puts on the record that the buyer intends to develop, renovate and resell. Where an investor buyer wants the seller to have no basis later to say they were misled about the plan, an acknowledgement of intention is cleaner than a nudge and a wink. It is not an assignment right and it does not create one — it removes an argument.
Notice and delivery decide whether the assignment happened
Every assignment provision I have ever reviewed depends on notice, and notice in an Ontario agreement is governed by the agreement’s own delivery provisions. The Court of Appeal has been unsentimental about this. In High Tower Homes Corp. v. Stevens, 2014 ONCA 911, a waiver sent by fax where the agreement called for personal delivery was reported to be ineffective. The method the parties chose governed.
Apply that to an assignment. If your client’s agreement specifies how notices travel and to whom, and the assignment notice goes out some other way, you have handed the seller an argument that no valid assignment ever occurred. That argument surfaces at the worst possible moment, which is when the assignee fails to close and everyone starts reading the schedule carefully.
The counterweight is worth knowing too. In VanderMolen Homes Inc. v. Mani, 2025 ONCA 45, buyers who had waived conditions and paid the deposit were held bound even though the seller’s acceptance of an extension arrived a day late; the parties’ subsequent conduct kept the agreement alive. A missed technical step is not automatically fatal. But that is a case about being rescued, not a drafting strategy. Do not plan around it.
The short version
Serve the assignment notice exactly the way the agreement says notices are served, keep proof, and put the assignee’s covenant in the same package. An assignment that exists only in an email chain between two buyers is not an assignment as against the seller.
The deposit does not move because the buyers did
Here is the practical problem nobody warns new agents about. The original buyer paid a deposit into a brokerage trust account. Now there is a new buyer, who quite reasonably expects to fund their own deposit and quite reasonably expects the first buyer to be paid out.
The brokerage cannot simply move it. A brokerage may disburse deposit money on a written direction signed by all parties to the agreement of purchase and sale, or on a court order. Those are the two routes. There is no third route where the deposit holder decides what is fair, and the brokerage’s own view of the merits is irrelevant.
So the direction has to be papered at the same time as the assignment, signed by the seller, the original buyer and, depending on how the deal is structured, the assignee. If you leave it until the week of closing you will be chasing a signature from a seller who has no incentive to hurry. I have watched a $60,000 deposit sit in trust for months after a closing because nobody obtained the direction while everyone was still cooperative. More on the mechanics in deposit clauses in an Ontario APS.
Where the seller is taking back financing
If the seller is taking back a charge or mortgage as part of the price, an assignment clause that releases the original buyer is a problem and you should be able to explain why in one sentence: the seller underwrote a specific person’s covenant, and a release swaps that covenant for a stranger’s.
The seller agreed to lend on the strength of who the buyer was. If the buyer can substitute anybody before closing and walk away from liability, the security the seller thought they had is not the security they end up with. In that structure I would expect a seller’s lawyer to insist on consent-based assignment at best, and more often on no assignment at all.
The same logic applies anywhere the seller’s decision depended on the identity of the buyer — a rent-back arrangement, a staged closing, a deal where the seller is relying on the buyer’s covenant after completion.
Your exposure as the registrant who wrote it
Three live issues, and none of them are theoretical.
Advertising. Assignment listings are where registrants get themselves into trouble, because the pitch is almost always a comparison between what the original buyer paid and what the assignment is being offered at. Under the advertising rules a registrant must not reveal the contents of an agreement, including the price, without the consent of all parties to it. That means the seller too, not just your own client. RECO’s standard for a misleading statement is also broader than most agents assume: a statement is misleading if it causes someone to have a wrong idea or impression, and it does not help you that some readers were not misled.
Remuneration. An assignment deal usually involves a fee payable to somebody on a transaction that is not a conventional sale. Disclosure of remuneration must be distinct and separate from the representation agreement and from the agreement facilitating the transaction — in other words, not buried in a schedule — and terms affecting acceptance must be disclosed as soon as possible after the offer is made and before any offer is accepted.
Self-represented parties. Assignment deals attract unrepresented participants, often the assignee. You may not advise a self-represented party on price, terms or contract clauses. Confirm they intend to proceed without representation, deliver and explain the RECO Information Guide and the Information and Disclosure to Self-Represented Party form, say plainly that you act for your client and not for them, and make reasonable efforts to obtain written acknowledgement of the form.
Choosing between the variants
Use this the way I use it in a file review — identify the client, identify what the other side actually fears, and then pick.
| Code | Whose tool | What it actually does | Reach for it when |
|---|---|---|---|
| ASSIGN-1 | Buyer | Permits assignment before completion, requires notice to the seller and a direct covenant from the incoming party, and ties the original buyer’s release to those steps | Investor buyers, entities not yet incorporated, and any buyer whose plan may involve a different name on title than the one on the offer |
| ASSIGN-2 | Seller | Restrains assigning, transferring, listing or advertising the buyer’s contract rights without written consent, with consent at the seller’s option | Seller take-back financing, builder inventory, rent-backs, and any seller who does not want the deal marketed as an assignment |
| DEV-4 | Either | Records the buyer’s stated intention to develop, renovate and resell | Investor purchases where you want the buyer’s plan on the record rather than inferred later |
| Silence | Nobody | Leaves assignability to contract law and to the parties’ lawyers to argue about | Never by choice. If assignment matters to your client, say so in the schedule |
How I make my agents run an assignment file
The procedure below is not complicated. It is just done in the right order, which is the part that fails.
- Ask the buyer, at the listing presentation or the first offer conversation, whether there is any chance a different name goes on title. If the answer is anything other than a firm no, the assignment provision goes in the first offer, not into an amendment later.
- Read the other side’s paper first. On pre-construction and builder deals, the builder’s agreement governs and will usually have its own consent, fee and timing machinery.
- Confirm the notice provisions in the agreement and diarise how notice must be delivered — method, recipient, and deadline — before the assignment is negotiated, not after.
- Get the assignee’s covenant to the seller drafted by a lawyer and delivered with the notice, as one package.
- Prepare the written direction to the deposit holder at the same time, signed by every party to the agreement of purchase and sale. Chase it while people are still cooperative.
- Check the assignee’s residency and entity status against the Non-Resident Speculation Tax and the federal non-Canadian purchase prohibition, and send them to their own lawyer for the answer.
- Before any advertising, obtain written consent from all parties to the agreement for anything that reveals its contents, including price. If you cannot get it, do not publish it.
- Send the completed package to your broker of record for review before it is signed, not after.
The short version
The assignment itself is a lawyer’s document. Your job is to make sure the right to do it exists in the agreement, that the notice route is understood, that the deposit direction is signed while everyone is still speaking, and that nothing you publish reveals a price you do not have consent to reveal.
Questions agents actually ask
Does writing “and/or assignee” on the buyer line give my buyer the right to assign?
No. It identifies a possible party but it does not create an assignment mechanism, does not say how notice is given, does not bring the incoming party into a promise with the seller, and does not release your buyer from anything. If assignability matters, use a proper provision such as ASSIGN-1 and have the buyer’s lawyer review it before you submit the offer.
If my buyer assigns the agreement, are they off the hook?
Not automatically. Transferring the benefit of a contract and being discharged from its obligations are separate things. ASSIGN-1 is drafted so that the release depends on notice going to the seller and on the incoming party covenanting directly with the seller. Miss either step and your buyer may keep the liability while losing the property. The release question is ultimately one for the lawyers.
Can a seller refuse an assignment for no reason under ASSIGN-2?
ASSIGN-2 is drafted so that consent sits in the seller’s discretion rather than being subject to a reasonableness test. If your buyer needs a reasonableness standard, that has to be negotiated into the agreement before acceptance; you cannot read it in afterwards. Whether any particular refusal is open to challenge is a legal question for the buyer’s lawyer.
Who gets the original deposit back when a deal is assigned?
Nobody, until there is a written direction signed by all parties to the agreement of purchase and sale, or a court order. A brokerage holding deposit money in trust has only those two routes and no discretion of its own. Prepare the direction at the same time as the assignment documents, while the seller and the original buyer are still cooperating.
Can I advertise an assignment listing with the original purchase price?
Not without the consent of all parties to that agreement, which includes the seller. The advertising rules prohibit revealing the contents of an agreement, including price, without that consent. RECO also treats a statement as misleading if it causes someone to have a wrong idea or impression, so comparisons framed to imply a bargain need to be accurate and supportable.
Why should a seller taking back a mortgage refuse a broad assignment right?
Because the seller agreed to lend on the strength of a specific buyer’s covenant. A clause that lets the buyer substitute anyone and walk away from liability replaces the covenant the seller underwrote with a stranger’s. The same reasoning applies to rent-backs and staged closings where the seller depends on the buyer’s promise after completion. That is a structure to raise with the seller’s lawyer.
The clause checklist I make my own agents use
A one-page pre-submission check for conditions and schedules — the dates, the notice route, and the eight things that get missed. Built for Ontario agents. Free, and there is no drip campaign behind it.
Separately — if you have ever wondered what your last twelve months would have paid on a different split, run it through Quantum Leap. Six questions, no signup wall.
Writing assignment deals without a second reader?
Every assignment file at RE/MAX Quantum comes across my desk before it is signed, and I read the notice provisions and the deposit direction first because that is where these deals fail. If your brokerage is handing you a template and wishing you luck, that is a conversation worth having.
Book a 15-minute call or call or text 833-330-1925.
If the honest answer is that your current brokerage is fine, I will tell you that.
Related reading
- Deposit Clauses in Ontario: Upon Acceptance, Herewith, and the 24-Hour Trap
- Environmental Clauses in Ontario: Oil Tanks, Flood Plains, Site Assessments and Endangered Species
- Kitec Plumbing Clauses in Ontario: The Warranty, the Acknowledgement, and the Settlement That Closed
- Rent Review Clauses on a Commercial Purchase: Who Pays and Who Controls the Application
- Swimming Pool Clauses in Ontario: Bylaw Compliance, Working Order and Winterization
- Every clause and condition guide in one place
- OREA, Guidelines for Residential and Commercial Clauses, revised 19 May 2026 (OREA member resource)
- High Tower Homes Corp. v. Stevens, 2014 ONCA 911
- VanderMolen Homes Inc. v. Mani, 2025 ONCA 45
- RECO Bulletin 5.1, Advertising (17 January 2024)
- RECO Bulletin 3.1, Disclosure obligations
- RECO Bulletin 2.4, Assisting a self-represented party
- Ontario Ministry of Finance, Non-Resident Speculation Tax
Jatin Dua is Broker of Record and co-founder of RE/MAX Quantum Realty, Brokerage, Unit 101, 799 The Queensway, Etobicoke. Four-plus years in the GTA and more than $100M in sales volume. He reviews the agreements his agents write.
This is professional commentary from a Broker of Record on drafting and brokerage practice in assignment transactions. It is not legal, tax or accounting advice. Assignment documents, releases and deposit directions should be prepared or reviewed by the client’s lawyer, and tax treatment should be confirmed with their accountant. This is general professional commentary from a Broker of Record on drafting practice. It is not legal advice, it is not a substitute for your own brokerage’s policies, and it does not create any professional relationship. Clause codes refer to OREA’s Guidelines for Residential and Commercial Clauses, an OREA member resource — the clause wording itself is OREA’s and is not reproduced here. Always work from your brokerage’s approved forms, and send your client to a lawyer for anything turning on interpretation, enforceability or remedy. Legislation, regulator guidance and case law all change; verify anything you are relying on.