What are the main risks when buying a pre-construction condo in Ontario?
Buying a pre-construction condominium in Ontario involves risks not present in resale purchases. The most common are: construction delays (projects frequently take longer than projected); unit specifications that differ from the original representations; closing cost adjustments that inflate the purchase price above what was originally expected; and the financial health of the developer changing before closing.
Ontario offers some protections. Purchasers of new homes, including new condos, may have warranty coverage through Tarion (the provincial warranty authority), which covers things like defects in work and materials and deposit protection up to specified limits. You also have a 10-day cooling-off period after signing a pre-construction agreement of purchase and sale during which you can rescind and receive your deposit back without penalty.
HST applies to new residential construction in Ontario. While there are rebates available for purchasers who buy as a principal residence, investors buying to rent or flip may face different HST treatment. This is a common and sometimes costly surprise — get HST advice before signing.
Key takeaways
- Delays, specification changes, and closing cost adjustments are common risks.
- Tarion provides new-home warranty protection and deposit coverage up to defined limits.
- You have a 10-day statutory cooling-off period to rescind a pre-construction agreement.
- HST on new construction can significantly affect the true purchase cost — take advice early.