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In Ontario, a pre-construction condo deposit is not automatically refundable, a mortgage preapproval is not a guarantee, and interim occupancy is not the same as owning the unit. Your agreement, disclosure statement and statutory protections determine when you can cancel or recover a deposit. Financing must usually be requalified near closing, and you may need substantial cash for taxes, adjustments, legal work, upgrades and interim occupancy before regular mortgage payments begin.
The rules below are Ontario-focused. Down-payment and mortgage-qualification figures are Canadian federal guidance; GST/HST timing is federal. Have an Ontario real-estate lawyer review the complete purchase package before you sign or rely on a cancellation, refund, assignment or closing-date provision.
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What you receive and sign when buying pre-construction
The builder should provide more than a price sheet. The package normally includes the purchase agreement, disclosure statement, Residential Condominium Buyers’ Guide, Condominium Home Addendum and Tarion information. These documents set the deposit schedule, occupancy and closing dates, permitted changes, adjustment clauses, assignment rules, termination rights and tax treatment. The advertised price is not a substitute for reading the package.
Deposits are usually held in trust
Ontario condominium deposits are generally required to be held in trust rather than spent as ordinary builder revenue. A trust arrangement protects the money while the transaction proceeds, but it does not create an unconditional right to a refund. The agreement and Ontario’s condominium legislation determine when a deposit can be returned.
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The 10-day rescission period
Generally, an Ontario buyer has 10 days to rescind after receiving the fully signed agreement, disclosure statement and Residential Condominium Buyers’ Guide. The clock is tied to receipt of the required documents, not simply the day a salesperson takes a deposit. A material change to the disclosure statement can create another 10-day period. Give any notice exactly as the agreement requires and obtain legal advice before assuming a rescission notice is effective.
Are pre-construction condo deposits refundable?
Not automatically. Refund rights come from three different places: the agreement, statutory rescission rights and a qualifying builder termination. A buyer who simply changes their mind after applicable cancellation rights expire may not have the same remedy as a buyer whose project is terminated or whose disclosure rights were not properly delivered.
| Situation | What it can mean | What to do |
|---|---|---|
| Buyer rescinds during an applicable Ontario 10-day period | The agreement can generally be cancelled and the deposit returned, subject to following the statutory and contractual notice process. | Confirm the document-receipt date, send notice in the required form and have a lawyer verify delivery. |
| Builder terminates under a permitted condition | Conditions may include inadequate sales, unavailable project financing or missing approvals. Ontario guidance generally contemplates return of the deposit with applicable interest. | Read the termination clause and return timetable; do not sign a release without legal advice. |
| Builder does not return a deposit after a qualifying termination | Tarion’s condominium deposit protection is up to $20,000, subject to the warranty program’s eligibility and claim rules. | Keep proof of payment and termination, then contact Tarion and your lawyer promptly. |
| Buyer wants out outside a statutory or contractual right | The agreement controls. A refund is not assured, and other contractual consequences may apply. | Ask counsel about negotiation, assignment provisions and potential exposure before missing a payment. |
The $20,000 Tarion limit is a protection ceiling, not a promise that every cancelled transaction qualifies or that every dollar of a larger deposit is covered. Tarion’s current guidance should be checked for eligibility and claim procedure.
How financing changes between signing and closing
A preapproval estimates the amount a lender may provide. The Financial Consumer Agency of Canada (FCAC) says a lender may hold a quoted rate for roughly 60 to 130 days, depending on the lender; a project that takes several years will outlast that window. FCAC also states that preapproval does not guarantee final approval. Canada Mortgage and Housing Corporation (CMHC) similarly warns that a pre-approved certificate still requires final approval during the conditional-offer period.
What the lender can reassess
- Current employment, self-employment income and documentation.
- Existing debts, credit history and any new borrowing.
- The completed unit’s appraised value and the loan-to-value ratio.
- The final purchase price, upgrades, parking or locker charges and closing adjustments.
- Mortgage rules, lender policy and interest rates in force at final underwriting.
Preserve the financial profile you used for preapproval. Avoid taking on a car loan or large credit-card balance, keep deposit and closing funds in traceable accounts, and tell the lender about employment or income changes. Request an updated mortgage commitment well before the builder’s firm closing date; discovering a shortfall after an occupancy notice leaves little time to restructure.
Down-payment minimums in Canada
FCAC’s current minimums are tiered by the home price. They are minimum regulatory thresholds, not a promise that a lender will approve the loan.
| Purchase-price portion | Minimum down payment | Important qualification |
|---|---|---|
| First $500,000 | 5% | Applies to that portion only. |
| Amount from $500,000 to $1.5 million | 10% | Applies to the portion in this band; the first $500,000 is still calculated at 5%. |
| $1.5 million or more | 20% | Mortgage loan insurance is generally unavailable at this price level. |
Less than 20% down typically requires mortgage loan insurance. A lender can require more than these minimums because of credit, income, property type, borrower status or its own risk policy. FCAC’s mortgage-preparation guidance uses 39% gross debt service and 44% total debt service as common qualification guidelines; lenders apply their underwriting rules and the applicable stress test.
What happens during interim occupancy?
In an Ontario condominium, interim occupancy occurs when the unit is ready for you to occupy but the condominium corporation is not yet registered and title has not transferred. You can live in the unit under the occupancy arrangement, but you are not yet the registered owner. Registration and final closing happen later.
How the occupancy fee is calculated
Ontario’s stated maximum components are monthly interest on the unpaid balance at the prescribed rate, estimated municipal property taxes and projected common expenses. The purchase agreement and disclosure documents should show the builder’s calculation, the start date and payment method. Ask for a written breakdown rather than relying on a salesperson’s estimate.
When the mortgage starts
Because title cannot transfer during interim occupancy, mortgage funding and ordinary mortgage payments generally begin only at final closing, after condominium registration. During occupancy, you usually pay the builder’s occupancy fee instead. Budget for that fee as a real monthly housing cost; it does not automatically reduce the principal you will owe at closing.
Practical occupancy checks
- Confirm the occupancy date, notice period and permitted delay language.
- Arrange tenant-style or condo-owner insurance as required by the agreement and lender.
- Document deficiencies with dated photographs and written notices.
- Clarify responsibility for utilities, move-in charges, elevators, parking and storage.
- Keep cash available for the final closing, even while paying occupancy charges.
How much cash is needed to close?
Closing cash is more than the remaining purchase price. CMHC’s home-buying guidance identifies the following categories; the exact amount depends on your agreement, municipality, lender and transaction facts.
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|---|---|---|
| Balance of the purchase price | The deposit is credited, but the remaining balance must be funded from the mortgage and your cash. | Match the lender’s commitment to the statement of adjustments and final price. |
| Legal fees and disbursements | Your lawyer reviews title, trust funds, registration and closing documents. | Obtain a written estimate that includes searches, registrations and tax on legal services. |
| Appraisal and lender charges | The lender may require a valuation and other underwriting services. | Ask which charges are paid upfront and which are added to the loan. |
| Land-transfer or land-registration taxes | Government taxes are generally payable when title transfers. | Confirm provincial and municipal amounts and whether any first-time-buyer relief applies to you. |
| Adjustments | You may reimburse the builder for prepaid taxes, common expenses, utilities or other agreed items. | Review each line; challenge an unexplained adjustment before signing. |
| GST/HST | New residential construction can attract tax, subject to the agreement and any applicable rebate. | Confirm whether the quoted price includes tax and who receives or assigns any rebate. |
| Upgrades, parking and lockers | Selections and separately priced areas increase the taxable and financed amount. | Keep signed change orders and verify that every charge appears in the final statement. |
| Insurance, utilities and warranty fees | Policies, account connections and warranty-related charges may be due around occupancy or closing. | Set up accounts before the required dates and ask the builder for a fee schedule. |
| Interim occupancy charges | These are payable before final closing and are separate from regular mortgage payments. | Maintain a reserve for the entire estimated occupancy period, including possible delays. |
You will also need ongoing funds for condominium fees, property tax, utilities, insurance and mortgage payments after closing. A lender’s approval for the mortgage amount does not reserve cash for these non-mortgage obligations.
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When is GST/HST due on a new condo?
For a new residential condominium that was not registered before possession, the Canada Revenue Agency says GST/HST is payable on the earlier of transfer of ownership or the day 60 days after condominium registration. The agreement should state whether the purchase price includes tax and how a new-housing rebate, builder credit or assignment of rebate is handled.
Do not assume an advertised “tax included” price means you will receive a cash rebate. Eligibility, principal-residence use, occupancy and assignment wording can affect the result. Have your lawyer and tax professional reconcile the agreement with the statement of adjustments, especially if you intend to rent the unit or assign the purchase.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.A decision checklist before signing
- Map every cash call. Write the amount and due date for each deposit installment, upgrade, parking or locker payment, occupancy fee and closing charge.
- Read dates as ranges. Identify the first tentative occupancy date, firm date, outside date, extension rights and the consequences of delay.
- Test financing at closing, not just today. Ask a lender or broker how the future purchase price, debt-service ratios, stress test and appraisal will be assessed.
- Verify cancellation language. Locate builder termination conditions, your rescission rights, notice addresses and the deposit-return process.
- Model taxes and adjustments. Obtain a written explanation of GST/HST, rebates, development-related adjustments, municipal taxes and common-expense credits.
- Review operating costs. Compare projected condominium fees, utilities, insurance and property taxes with your post-closing budget.
- Have counsel review the package. Ask an Ontario condominium lawyer to explain clauses that limit assignment, permit substitutions or authorize material changes.
Common problems and how to reduce the risk
Your preapproval expires
Solution: keep income and credit stable, maintain documented funds and obtain a new commitment inside the lender’s rate-hold window. Treat every preapproval as conditional until final underwriting is complete.
The appraisal is below the contract price
Solution: ask the lender early how a valuation shortfall would be handled and preserve additional liquidity. Do not assume the lender will finance the full contract price or all upgrades.
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Occupancy lasts longer than expected
Solution: reserve enough for the builder’s occupancy fee, utilities and insurance for an uncertain period, while also preserving the closing funds that cannot be diverted to living expenses.
The project is terminated
Solution: read the agreement’s termination notice and refund provisions, keep all payment records, and obtain legal advice before signing a release. If a qualifying condominium deposit is not returned, review Tarion’s protection process and its $20,000 maximum.
The closing statement contains unfamiliar charges
Solution: request the statement of adjustments in advance, ask for an explanation and have your lawyer verify each item against the agreement, disclosure statement and signed upgrades.
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The 10-day Ontario rescission mechanics, interim-occupancy framework and Tarion condominium deposit protection should not be presented as national rules. Other provinces have different statutes, warranty programs, tax treatment and closing procedures. If the property is outside Ontario, use the applicable provincial regulator and have local counsel review the contract.
Bottom line for a safe pre-construction purchase
Proceed only when you can fund the staged deposits, survive interim occupancy, qualify again for the mortgage at final closing and cover taxes and adjustments beyond the advertised price. The decisive documents are the signed agreement and disclosure package; the decisive safeguards are an Ontario lawyer’s review, a lender’s current commitment and a cash reserve sized for delay and valuation risk.
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