- If a condo builder ends the agreement, it must return your whole deposit within 10 days.
- Builders must generally hold condo deposits in trust, and Tarion protects deposits and other payments up to $20,000 plus a limited amount of interest.
- Payments made to reserve a unit before you signed have no Tarion deposit protection.
A letter or email says the project is terminated. You have paid a deposit, maybe more for upgrades, and the first question is how quickly the money comes back.
Ontario has specific rules about where deposits are held and when they must be returned. This article walks through them, and points out the places where your own agreement and paperwork decide the answer.
How fast the deposit must come back
If a condo builder ends the agreement, it must return the buyer's whole deposit within 10 days. Note the date on the termination notice and the date the refund arrives. If the 10 days pass without payment, tell the builder in writing and ask a lawyer about next steps.
Where your deposit should be held
Condo builders generally must hold the deposits and other money they receive for a project in trust. Tarion's requirements say vendors must comply with the Condominium Act by putting deposits above $20,000 per unit in a separate trust account, in the trust account run by the escrow agent, or by getting excess deposit insurance.
Exactly how your own deposit was held depends on your agreement and the builder's arrangements, so it is worth confirming with a lawyer. Tarion's separate protection for deposits and other payments is covered in the next section.
What Tarion protects
For a new condo unit, Tarion protects deposits and other payments, including money paid for upgrades and extras, up to $20,000, plus a limited amount of interest that has built up. Since January 2018, that includes other payments the buyer makes, and it applies where the builder goes bankrupt, fundamentally breaches the agreement, or the buyer rescinds before closing, and the deal does not close.
Whether you are owed interest beyond the limited amount Tarion covers depends on your agreement, so check its wording.
| Type of payment | Tarion deposit protection |
|---|---|
| Deposit on a condo unit | Up to $20,000 plus limited interest |
| Upgrades and extras | Included in the $20,000 |
| Amounts above $20,000 | Beyond Tarion's $20,000 limit; under the Condominium Act the builder must use a separate trust account, the escrow agent's trust account or excess deposit insurance |
| Payments to reserve a unit before signing | No protection |
Freehold homes follow different limits. For agreements signed on or after January 1, 2018, freehold deposits are protected up to $60,000 if the price is $600,000 or less, and contract homes get no deposit protection. Those figures do not apply to a condo unit.
Cancellation versus delay
A builder ending the deal is different from a delay. For delays, the unit not being ready by the Outside Occupancy Date gives you 30 days to terminate. Delay compensation is up to $7,500 in total, with living expenses at a fixed $150 a day. Tentative dates can be extended several times with 90 days' notice and no compensation.
If the notice you received is actually an extension, a closing date change or a proposed amendment, your options may differ from a true termination. Read it closely before you respond.
The Tarion Addendum overrides any conflicting terms, and early-termination conditions that the Addendum does not allow cannot be enforced. If the builder points to a clause in your agreement to justify cancelling, it is worth having a lawyer compare that clause with the Addendum.
Your own right to back out
You also have rights of your own. A buyer of a pre-construction condo has a 10-day cooling-off period to rescind the agreement of purchase and sale, and the agreement does not bind the buyer until they receive both the disclosure statement and Ontario's Residential Condominium Buyers' Guide. A buyer may also rescind the purchase after a material change in the information in the disclosure statement.
These rights matter because a cancellation notice is sometimes followed by a revised offer. Before you decide anything, gather these items and ask a lawyer how any change affects you:
- The date you received the disclosure statement and the Buyers' Guide.
- Any notice describing a change to the disclosure statement.
- Any revised or replacement offer from the builder.
What to do next
- Keep the termination notice, the agreement, the Tarion Addendum and all receipts.
- List every payment, including upgrades, extras and any reservation fees.
- Mark the date 10 days after the builder ended the agreement.
- Ask the builder or its lawyer where the deposit is held.
- Do not sign a release or accept a replacement offer without reading it.
- Speak with a lawyer if the money is late or the reason for cancellation is unclear.
Frequently asked questions
How long does the developer have to return my deposit?
If a condo builder ends the agreement, it must return your whole deposit within 10 days. If it does not, put your demand in writing and get legal advice.
Do I get interest on the deposit?
Tarion protects a limited amount of built-up interest along with deposits up to $20,000. Whether more interest is owed depends on your agreement, so have it checked.
What if the builder goes bankrupt?
Tarion deposit protection applies where the builder goes bankrupt, fundamentally breaches the agreement, or the buyer rescinds before closing and the deal does not close. Protection is up to $20,000 plus limited interest.
Is the money I paid to reserve my unit protected?
Payments made to reserve or hold a unit before the purchase agreement was signed have no Tarion deposit protection. A lawyer can tell you whether you have other ways to recover them.
Sources
- Condominium Authority of Ontario – Pre-construction Condos — condoauthorityontario.ca
- Tarion – Coverage before you close — tarion.com
- Tarion – Requirements for Receipt and Release of Security (Builder Bulletin 28) — tarion.com
- Tarion – Condo Units: coverage for occupancy dates, delays & cancellations — tarion.com
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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