Pre-construction deposit structure프리컨 디파짓 일정

What is it?

When you buy a resale home, you pay the deposit once, right after your offer is accepted. Buying a home before it is built is different. The deposit is split into several instalments, paid from signing to occupancy over months or years. The "when and how much" is the deposit structure (also called the deposit schedule).

The schedule comes from the contract (the pre-construction agreement of purchase and sale, or APS), not from a law. So it differs by project and can be negotiated. In Toronto and the GTA, condo deposits that add up to 15% to 20% of the price are common practice, but only your contract tells you for sure.

The deposit is part of the price. On final closing, the deposits you have already paid are subtracted from the price and you pay the balance. In other words, the deposit becomes part of your down payment (the part of the price you pay without a loan).

A typical schedule

This is the shape you often see on GTA pre-construction condos. Check your own contract’s deposit schedule for the real dates and amounts.

This table describes common practice, not a rule. Some projects take only 10%, and some have no deposit due on occupancy. In a slow market builders may advertise an "extended deposit structure".

Condo deposits are held in trust

A builder cannot spend pre-construction condo deposits freely. Section 81 of the Condominium Act, 1998 says that as soon as you make a payment, the builder’s lawyer or a trustee of a class set by law (another lawyer, or an escrow agent with a deposit trust agreement) must receive and hold it in trust, together with the interest earned on it. The money must sit in a separate trust account in Ontario.

Within 10 days of each payment the builder must give you written evidence, in the prescribed form, that the money is in trust (section 81 (6)). Keep this proof for every instalment. If it does not arrive, have your lawyer ask for it.

There are exceptions. Money for items that will not be permanently attached to the home (furniture, for example) and the occupancy fee you pay during interim occupancy are not trust money (section 81 (2)).

The builder may take money out of trust to use for construction if it provides security of a kind set by law (section 81 (7)): an insurance policy that insures against loss of the deposits, or a deposit receipt issued by Tarion. The insurance is what people often call "excess deposit insurance". The builder must pay the premium and cannot pass the cost on to you, directly or indirectly (O. Reg. 48/01, section 21 (3)).

Deposits earn interest

Section 82 of the Condominium Act makes the builder pay interest at the prescribed rate on all money paid toward the price. Interest runs from the day you pay until the day the unit is available for occupancy under your contract, and is paid on the occupancy date or the day the deed is delivered, either in cash or as a credit against what you owe.

The rate is set by regulation (O. Reg. 48/01, section 19 (3)). From April 1 to September 30 it is the Bank of Canada bank rate on March 31 of that year minus 2% a year; from October 1 to March 31 it is the bank rate on September 30 minus 2%. When the bank rate is low, the interest can be very small or nothing.

The rate for money refunded because the builder terminated the agreement changed in 2023. If no unit in the project (or phase) was sold before O. Reg. 504/22 came into force, and your agreement was signed on or after that day, the refund earns the Bank of Canada policy interest rate itself, not 2% below (section 19.1). The CAO says this applies from January 1, 2023. If you cancel within the 10-day cooling-off period, the rate is still "bank rate minus 2%".

When do you get it back, and when can you lose it?

• If you cancel within the 10-day cooling-off period: the builder must promptly refund everything you paid, without penalty or charge, with interest (Condominium Act, section 73 (3)).
• If the builder cancels the project (early termination conditions such as a sales target, project financing or municipal approvals): you must get your deposits back with interest. Tarion says that when a builder terminates the agreement, the deposit must be returned in full within 10 days. You normally do not recover any rise in home prices.
• If you terminate after the Outside Occupancy Date is missed: you get back everything you paid, including upgrades, with interest (see "Occupancy date and critical dates").
• If you cannot close (no mortgage, not enough money, change of mind): you can lose the deposits and the builder may also claim further losses. Pre-construction contracts usually have no financing condition. Check whether yours has one before you sign.
• If the builder does not refund: claim from Tarion. The limit is $20,000 for a condo unit. For a freehold home, whose deposits are not held in trust, it is up to $60,000 if the price is $600,000 or less, and 10% of the price (up to $100,000) above that. A condo deposit much larger than $20,000 is still safe because the money itself is in trust.

Freehold pre-construction is different

Deposits on a new detached house or townhouse are also paid in instalments, but the Condominium Act trust rule does not apply. Tarion explains that condo deposits must be placed in trust under the Condominium Act. That rule does not cover freehold deposits, so Tarion’s deposit protection matters more.

For freehold agreements signed on or after April 1, 2026, you must register the purchase with Tarion within 45 days of signing to qualify for the maximum coverage (your lawyer or agent can do it for you). Late registrations are paid from a separate fund of $15,000,000 a year. Tarion has said it will defer the change to coverage amounts until January 1, 2027. See "Tarion" for details.

On a freehold purchase, check in the contract who holds the deposits and where, and ask your lawyer.

What you can negotiate

• A smaller first instalment and longer gaps: for example, the first 5% at 90 days instead of 30, and the next 5% moved to occupancy. The slower the project is selling, the more likely the builder agrees.
• The total: 15% or 10% instead of 20%. A smaller deposit means you need more of the down payment in cash at closing.
• Proof of trust: written evidence within 10 days of each payment is your legal right, so it is something to insist on, not to negotiate.
• Fit with your own money: check that the deposit dates line up with FHSA or RRSP withdrawals, the sale of your current home or a bonus. Missing a deadline by even a day can be a breach of contract.
• Negotiate in writing, through your lawyer, during the 10-day cooling-off period. If the builder refuses, you can still walk away within that period.

Example