What is it?
A pre-construction purchase (often shortened to "pre-con") means buying a home from the developer or builder before it is built, or while it is being built. Instead of a real home, you look at floor plans, a model suite and renderings.
Most pre-construction sales are condos (apartments and condo townhouses), but you can also buy a freehold house or townhouse from plans. The two are protected a little differently. For a new condo, the Ontario Condominium Act, 1998 protects the buyer, and for any new home the Ontario New Home Warranties Plan Act (Tarion) and the builder licensing law (HCRA) apply.
On this site, the pre-construction listings use three status labels: "Now selling", "Coming soon" and "Under construction, now selling".
How is it different from buying a resale home?
| Resale home | Pre-construction | |
|---|---|---|
| Seller | The current owner (a person) | The builder (the "declarant" under the Condominium Act, the "vendor" under the warranty law) |
| What you see | The real home | Plans, a model suite, finish samples |
| Deposit | Usually one payment (around 5% is common) | Several instalments on a schedule set by the contract |
| Cooling-off | No period set by law | A new condo can be cancelled within 10 days of receiving the documents (Condominium Act, s. 73) |
| Moving in | On closing day | Condo: interim occupancy, then registration, then final closing. It can take years and be delayed |
| HST | Usually none | Applies. If you will live there, a rebate exists (usually built into the price) |
| Warranty | None set by law | A 1-, 2- and 7-year warranty from the builder, backed by Tarion |
| Extra closing costs | Land transfer tax, lawyer, and so on | The same, plus builder adjustments such as development charges |
Deposit percentages and extra costs come from the contract, not from a law. "Usually" and "common" in this table describe practice, and every contract is different.
Step by step
- Check the builder: look it up in the HCRA Ontario Builder Directory for a licence, past cancelled projects and discipline. If the builder is not listed, do not buy.
- Sign the contract: with the Agreement of Purchase and Sale you receive the Addendum (critical dates), the HCRA information sheet, the Tarion warranty information sheet, the disclosure statement and the CAO condo buyers’ guide. A condo contract does not bind you until you have the disclosure statement and the guide.
- 10-day cooling-off period (condo): within 10 days after you have all three documents (the signed agreement, the disclosure statement and the guide) you can cancel in writing for any reason. Use this time for a lawyer review and a mortgage consultation.
- Pay the deposit in instalments: follow the schedule in the contract. Condo deposits must be held in trust by the builder’s lawyer or an approved trustee, and you must get written proof within 10 days of each payment.
- Construction and date notices: the builder may push back the occupancy date under the Addendum rules, and must notify you in writing each time.
- Pre-delivery inspection (PDI): just before you move in, you walk through the home with the builder and record damage, missing items and anything not working on the PDI form.
- Interim occupancy (condo): you move in before the building is registered. You do not own the unit yet, and you pay a monthly occupancy fee instead of a mortgage.
- Final closing: once the condo corporation is registered, you pay the balance (your mortgage starts) and receive title. Your lawyer’s statement of adjustments lists the extra charges.
- Warranty period: the 1-, 2- and 7-year warranties start on your possession (occupancy) date. Report problems to the builder first, and to Tarion if they are not fixed.
When and how do you pay?
The deposit is paid in several instalments, not all at once: at signing, a few days later, some months later and at occupancy, on whatever schedule the contract sets. The total percentage also varies by contract. See "Pre-construction deposit structure".
A builder cannot spend condo deposits freely. Under section 81 of the Condominium Act, the builder’s lawyer or an approved trustee must hold them in trust, and under section 82 the builder must pay you interest at the prescribed rate. If the project is cancelled, you must get the money back with interest, and if you do not, you can claim up to $20,000 from Tarion.
Freehold homes have no trust requirement, but Tarion deposit protection is larger: up to $60,000 if the price is $600,000 or less, and 10% of the price (up to $100,000) above that. From April 1, 2026, freehold buyers must register their purchase with Tarion within 45 days of signing to qualify for the maximum coverage (the change to coverage amounts is deferred to January 1, 2027).
The rest of the price is paid on final closing, when your mortgage starts. A pre-approval you get today will not last until a closing years away, so you must re-qualify near closing. If your income, interest rates or home values change in the meantime, so does the amount you can borrow.
Extra money before and after moving in
- Interim occupancy fee (condo): during interim occupancy you pay the builder a monthly fee. Section 80 of the Condominium Act caps it at interest on the unpaid balance plus estimated property tax plus the projected condo fee. It does not reduce your mortgage, so many buyers feel it is money thrown away.
- Closing adjustments: many contracts let the builder charge development charges, parkland and education levies, utility hook-ups, the Tarion enrolment fee, registration costs and similar items to the buyer on closing. The Tarion Addendum includes summary sheets for these closing costs and adjustments. Have your lawyer negotiate a cap before you sign.
- HST: a new home bought from a builder is subject to HST (13%). If you will live in it you can claim the HST new housing rebate, and builders usually build the rebate into the price in exchange for taking it over. An investment unit you plan to rent out follows a different process. See "HST new housing rebate".
- Land transfer tax, legal fees, title insurance and the other costs of buying a resale home apply in the same way. Inside the City of Toronto the municipal land transfer tax is added.
What if it is delayed or cancelled?
Your occupancy date is on the first page of the Addendum, the "Statement of Critical Dates". The builder sets the date as "tentative" or "firm" and can extend it by written notice under the rules. If a firm occupancy date is missed you can claim $150 a day up to $7,500, and if the outside date is missed you have 30 days to terminate the agreement.
The whole project can also be cancelled. Under the "early termination conditions" in the contract, the builder can end the agreement if not enough units sell, financing is not arranged or municipal approvals do not come through. Tarion warns that with any pre-construction condo there is a possibility that the project may never be completed.
If a condo project is cancelled you must get your deposit back with interest. If the builder does not refund it, you claim from Tarion (up to $20,000 for a condo). You normally do not recover the rise in home prices since you signed, so ask a lawyer about other remedies. If you have concerns about how the cancellation happened, you can report it to the HCRA.
Can you sell before it is built? (Assignment)
Transferring your rights under the contract to someone else before you receive title is called an assignment. The CAO guide explains that contracts often require the builder’s consent, charge a fee and keep the original buyer liable for closing, and that the builder may refuse, which can stop the sale.
Profit on an assignment has tax consequences (HST and income tax). See "Assignment sale" and talk to an accountant before you sign.
Questions to ask before you sign
- Is the builder licensed by the HCRA, and will this project be enrolled with Tarion? (The disclosure statement must say whether the property is covered by the warranty plan.)
- When and how much is each deposit, and who holds it in trust? Will I get proof of trust within 10 days of each payment?
- What are the tentative and firm occupancy dates and the outside date, and what are the early termination conditions?
- Which adjustments can be charged on closing, and is there a cap?
- Is HST included in the price? What if I plan to rent the unit out?
- Is assignment allowed? What is the fee and what are the conditions?
- Are parking, a locker and appliances included? When will the amenities be finished?
- What share of the units does the builder intend to lease? (The disclosure statement states this to the nearest 25%.)
- What is the projected monthly condo fee in the first-year budget, and how much of it goes to the reserve fund?
Example
In November 2026 you agree to buy a pre-construction condo unit in North York for $700,000. On signing day you receive the agreement, the Addendum, the information sheets, the disclosure statement and the CAO guide, so the 10-day cooling-off period starts that day. Your lawyer reviews the disclosure statement and the contract and asks for a cap on closing adjustments; the builder agrees and you sign an amended agreement.
The contract’s deposit schedule is $5,000 on signing, the balance to 5% within 30 days, 5% after 180 days and 5% at interim occupancy. Within ten days of each payment you receive a trust confirmation from the builder’s lawyer. The first tentative occupancy date in the Statement of Critical Dates is June 2029; the builder extends it twice with 90 days’ notice, and you take interim occupancy in February 2030. For the seven months until registration you pay a monthly occupancy fee, and after registration in September 2030 you pay the $595,000 balance (including your mortgage) and the adjustments on final closing. The amounts and dates in this example are for illustration only, and every contract is different.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
An agreement of purchase and sale of a unit or a proposed unit entered into by a declarant or a person acting on behalf of or for the benefit of the declarant is not binding on the purchaser until the declarant has delivered to the purchaser a copy of the current disclosure statement and the condominium guide in accordance with subsection (1).In plain wordsA contract to buy a condo from the builder does not bind the buyer until the builder has delivered the disclosure statement and the CAO condo guide.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
To rescind an agreement of purchase and sale under this section, a purchaser or the purchaser’s solicitor shall give a written notice of rescission to the declarant or to the declarant’s solicitor who must receive the notice within 10 days of the latest of, … (a) the date that the purchaser receives the disclosure statement; … (c) the date that the purchaser receives a copy of the agreement of purchase and sale executed by the declarant and the purchaser.In plain wordsTo cancel, the buyer (or their lawyer) must send a written notice that the builder (or its lawyer) receives within 10 days of the latest of: the disclosure statement, the condo guide, or the fully signed agreement.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
If the purchaser assumes interim occupancy of a proposed unit or is required to do so under the agreement of purchase and sale, the declarant may charge the purchaser a monthly occupancy fee which shall not be greater than the total of the following amounts: … 1. Where applicable, interest calculated on a monthly basis on the unpaid balance of the purchase price at the prescribed rate. … 2. An amount reasonably estimated on a monthly basis for municipal taxes attributable to the unit. … 3. The projected monthly common expense contribution for the unit.In plain wordsThe monthly interim occupancy fee cannot exceed interest on the unpaid balance plus estimated property tax plus the projected condo fee.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
The declarant shall pay interest at the prescribed rate to the purchaser on all money that a person pays on account of the purchase price of a proposed unit or that the declarant credits to the purchase price of a proposed unit.In plain wordsThe builder must pay the buyer interest, at the rate set by regulation, on all money paid toward the price.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
Condominium unit deposits must be placed in trust under the provisions of the Condominium Act. If your purchase agreement is terminated by your builder, your deposit must be returned to you in full within 10 days. If your builder does not return your deposit, Tarion provides deposit protection of up to $20,000.In plain wordsCondo deposits must be held in trust. If the builder ends the agreement it must refund the deposit in full within 10 days, and if it does not, Tarion pays up to $20,000.
Source: tarion.com/node/730 · checked Oct 30, 2026
With the purchase of any pre-construction condominium unit, it is important to remember that there is a possibility that the project may never be completed.In plain wordsWith any pre-construction condo, remember that the project might never be finished.
Source: tarion.com/condo-units-coverage-occupancy-dates-delays-cancellations · checked Oct 30, 2026
If a builder is not listed, they may be operating without a licence, which is against Ontario law. Do not buy from unlicensed builders!In plain wordsA builder not listed in the Ontario Builder Directory may be unlicensed, which is illegal in Ontario. Do not buy from an unlicensed builder.
Source: obd.hcraontario.ca/ · checked Oct 30, 2026
Common questions
Is there a period when I can cancel a pre-construction condo purchase?
Yes. When you buy a new condo from the builder, you can cancel in writing for any reason within 10 days of receiving all three of the signed agreement, the disclosure statement and the CAO condo guide, and you get your money back with interest. Resale homes and new freehold homes have no such statutory period.
What percentage is the deposit?
No law sets a percentage. The contract sets the schedule and the amounts, and you usually pay in several instalments. Before you sign, check the total and the dates and make sure you can fund each payment.
If I get a mortgage pre-approval now, is it good until closing?
No. A pre-approval’s rate hold usually lasts months, while a pre-construction closing is years away. Near closing you are assessed again on your income, the rates of the day and an appraisal. That is why it matters not to take on new debt and to keep your income documents in order while you wait.
The occupancy date keeps moving. Do I get compensation?
If the builder extends the date under the rules of the Tarion Addendum attached to your contract (for example with 90 days’ written notice), there is no compensation. If a firm occupancy date is missed or notice is not given, you can claim delayed occupancy compensation of $150 a day up to $7,500 from the builder, and from Tarion if the builder does not pay. If the outside date is missed you can terminate within 30 days.
Does the money I pay during interim occupancy count toward the price?
No. The occupancy fee is interest, tax and condo-fee money, so it does not reduce the price or your mortgage principal. If the tax portion you paid turns out to be more than the actual tax, section 80 of the Condominium Act requires a refund.
Is there a home inspection for a pre-construction condo?
Instead of a resale inspection, there is a pre-delivery inspection (PDI) with the builder just before you move in. Record every scratch, missing item and thing that does not work on the PDI form and keep a copy. You may also bring your own inspector.
Guides that use this term
Sources checked
- Condominium Act, 1998, ss. 72–74, 79–82 (e-Laws) · checked Oct 30, 2026
- Condominium Authority of Ontario, Pre-construction condos · checked Oct 30, 2026
- CAO, Ontario’s Residential Condominium Buyers’ Guide (2025 edition, sections 3, 4, 6 and Appendix A) · checked Oct 30, 2026
- Tarion, Coverage & claims before you move in (deposit protection) · checked Oct 30, 2026
- Tarion, Condo Units: coverage for occupancy dates, delays & cancellations · checked Oct 30, 2026
- Tarion, The Pre-Delivery Inspection · checked Oct 30, 2026
- HCRA, Ontario Builder Directory · checked Oct 30, 2026