A real estate assignment of contract lets you sell your position in a pre-construction condo purchase before the building closes. You transfer your rights under the developer contract to a new buyer, who pays you for that position and then closes with the developer. In Miami this is common, but it is never automatic: whether you can assign, what it costs, and when you can do it all depend on the specific purchase contract you signed.
This guide explains how assignments work, what to look for in your contract, how the money flows, and which tax questions to bring to a CPA.
What an assignment of contract is in real estate
An assignment involves three parties:
The assignor is you, the original buyer who signed the purchase agreement with the developer.
The assignee is the new buyer who takes over your contract, including the obligation to close at the original price.
The developer is the seller. It still sells the unit at the contract price, and in most pre-construction contracts it must approve the transfer.
You are not selling a finished condo. You are selling a contract right: the right to buy a specific unit at a fixed price when the building is complete. Florida Realtors explains that for an assignment to happen, the contract must first allow it, and then the original buyer and the new buyer sign a separate written assignment agreement, which should be drafted by an attorney.
One point matters a lot: whether you are released from the contract after assigning. Florida Realtors notes that when the assignor is released, the seller's recourse if the assignee fails to perform is only against the assignee. If you are not released, you may remain responsible if the new buyer does not close.
Why buyers assign pre-construction contracts
Pre-construction projects in Miami can take years from contract to closing. Plans change in that time. Common reasons to assign include:
The market price of similar units has risen and the buyer wants to capture that difference before closing.
The buyer's financing, family, or business situation has changed.
The buyer does not want to fund the remaining balance at closing.
The buyer prefers a different project, size, or neighborhood.
Keep in mind that Florida gives buyers of new condominium units from a developer a short cancellation window. Under Florida Statute 718.503, the contract is voidable by the buyer by written notice within 15 days after signing and receiving the required documents, and again within 15 days after receiving an amendment that materially alters the offering in a way that is adverse to the buyer. Once those windows pass, an assignment is often one of the few ways out, which is why the assignment clause deserves attention before you sign.
If you are comparing projects now, our Miami new developments page lists current pre-construction buildings, and our Brickell buyer's guide to 14 towers covers one of the busiest submarkets.
What your purchase contract must allow
Developer contracts in Miami are not standardized. Each developer writes its own, and assignment terms vary widely. Read these clauses, ideally with a Florida real estate attorney:
Permission to assign. Does the contract allow assignment at all? Some prohibit it outright; others allow it only with written consent.
Developer consent. Is consent at the developer's sole discretion, or can it not be unreasonably withheld? Are there conditions, such as approval of the new buyer's finances?
Assignment fee. Many contracts charge a fee to process an assignment. It may be a flat amount or a percentage of the price. Find the exact figure in your contract rather than relying on what another building charged.
Timing restrictions. Some developers do not permit assignments until a certain point, for example until a set share of units is sold or until closing is near. Others allow them only after the building is complete.
Marketing limits. Many contracts restrict how you advertise the assignment, including listing it on the MLS or online, so your resale does not compete with the developer's own sales.
Deposit credit. Confirm that the deposits you paid stay credited to the unit and carry over to the assignee at closing.
Release of the original buyer. Does the assignment release you from liability, or do you stay on the hook if the assignee defaults?
Limits on the number of assignments. Some contracts allow only one, or restrict assignments to related entities.
If a clause is unclear, ask for clarification in writing before you sign. It is much harder to negotiate assignment rights after the contract is executed.
How the money works
In an assignment, the new buyer usually does two things: reimburses you for the deposits you already paid, and pays you an additional amount for the position (often called the assignment premium). At closing, the new buyer pays the developer the remaining balance of the original price.
Illustrative example (round numbers, not a real deal)
The figures below are hypothetical and chosen only to show the mechanics. Your deposit schedule, fees, and costs will be different.
Original contract price: $800,000.
Deposits you paid to escrow so far: $240,000.
Price the new buyer agrees to pay you for the contract: $300,000 ($240,000 to reimburse your deposits plus a $60,000 premium).
What the new buyer owes the developer at closing: $560,000 (the $800,000 price minus the $240,000 in deposits already credited).
Your costs: assume a developer assignment fee, attorney fees, and any brokerage commission. In this example, suppose they total $25,000.
Your net before taxes: $300,000 minus $25,000 = $275,000, of which $35,000 is profit over the deposits you put in.
Total cost to the new buyer: $300,000 to you plus $560,000 to the developer, or $860,000 for a unit originally priced at $800,000. The assignment only makes sense for the assignee if comparable completed units are worth more than that.
Where the deposits sit also matters. Florida Statute 718.202 requires developers to hold buyer deposits in escrow. Deposits above 10 percent of the price may be used for construction costs if the contract allows it. Ask how your deposits are held before you assume they are fully in escrow.
Taxes to discuss with a CPA
This section is not tax advice. It lists questions to bring to a CPA who handles real estate.
Capital gain or ordinary income. IRS Publication 550 states that gain from selling an option to buy property that is, or would be, a capital asset in your hands is capital gain; if not, it is ordinary. IRS Publication 544 lists property held mainly for sale to customers as not a capital asset, so frequent assignors can face different treatment than one-time investors.
Short-term or long-term. Under Publication 544, capital assets held one year or less generally produce short-term gain, and those held longer than one year generally produce long-term gain. Ask your CPA how the holding period is measured for your contract.
FIRPTA for foreign sellers. Federal regulations (26 CFR 1.897-1) state that a contract to acquire an interest in real property is itself an interest in real property. The IRS explains that when a foreign person disposes of a U.S. real property interest, the buyer generally must withhold 15 percent of the amount realized, and that a seller can apply for reduced withholding with Form 8288-B. If you are not a U.S. tax resident, raise FIRPTA early, well before the assignment closes. Our FIRPTA guide for foreign condo sellers explains the withholding step by step.
If you are buying or investing from abroad, our guide on buying in Miami as a non-resident (in Spanish) covers related points.
Risks and how to reduce them
No buyer at your price. If the market softens, you may not find an assignee, and you still owe the balance at closing. Plan as if you may need to close.
Consent denied or delayed. Read the consent clause before you sign and request written approval before you accept an assignee's money.
Staying liable. If you are not released, a defaulting assignee can become your problem. Ask for a release in the assignment documents.
Breaking marketing rules. Advertising where the contract prohibits it can put your contract at risk. Follow the developer's rules exactly.
Informal side deals. Use a written assignment agreement drafted by an attorney, with funds handled through escrow or a title company.
Tax surprises. Speak to a CPA before you sign the assignment, not after.
How we help
We help buyers review assignment terms before signing a pre-construction contract, estimate what an assignment might realistically net, find qualified assignees within the developer's rules, and coordinate with your attorney, the developer, and the title company. We do not provide legal or tax advice, but we make sure the right professionals see the right documents at the right time.
Thinking about assigning a Miami pre-construction contract, or buying one? Floralba Núñez has more than 20 years in U.S. real estate and works in English and Spanish, with a focus on pre-construction guidance. Contact Floralba to review your options.
Sources
Florida Statutes § 718.503, Developer disclosure prior to sale (Florida Senate)
Florida Statutes § 718.202, Sales or reservation deposits prior to closing (Florida Senate)
This article is general information, not legal or tax advice. Every developer contract is different; have a Florida real estate attorney review yours. Floralba Núñez, Broker Associate · Finca Raiz International Realty Corp. Equal Housing Opportunity.