An assignment of contract is a sales transaction where the original buyer of a property (the “assignor”) allows another buyer (the “assignee”) to take over the buyer’s rights and obligations of the Agreement of Purchase and Sale, before the original buyer completes on the property. The assignee is the one who ultimately completes the deal with the vendor. In other words, an assignment clause allows the buyer of a home to sell the place before they take possession of it. Assignments are most common in pre-built homes and condos than on re-sale properties, but they are possible on any type of trade.
Typically there would be a situation where a buyer’s financial or personal situation changes before closing. Assigning allows them to pass along the contract to another buyer, without backing out of the deal with the vendor (Developer in most cases). For instance, someone could buy a condo that is still under construction and might not be ready for a couple of years. The buyer’s work or family situation could change during that time, (babies!) causing them to change their mind about living in the condo they purchased. So they decide to assign their unit to a new buyer. Get their money back (plus any profits) and move on.
However, it can be used as purely a speculative or investment too. Purchasing a pre-sale condo at a certain price point, if the market value increase in 1-2 years after the purchase, the assignor can assign their unit for profit after expense.
Another example may be where a buyer runs into financial difficulties to close on an existing house and wants to find another buyer rather than risk the financial penalties that might come with having to try to back out of the deal.