10-Day Cooling-Off Period for New Condo Purchases in Ontario

You just signed an agreement to buy a new condo from a builder, and you want to know whether you can still back out. Ontario law gives buyers a short window to do exactly that.

The window is short, so the details matter. This article explains when it starts, what it covers and how to use it carefully.

What the cooling-off period is

A buyer of a new (pre-construction) condo from a builder has a 10-day cooling-off period to rescind the agreement of purchase and sale under the Condominium Act, 1998, s. 73. Rescinding means cancelling the agreement as though the purchase were undone.

It applies to purchases from a builder, not to resales of existing units.

When the clock starts

The period starts once the buyer has the purchase agreement, the disclosure statement and the Condo Buyers' Guide. A pre-construction purchase agreement is not binding until the buyer has received both the disclosure statement and Ontario's Residential Condominium Buyers' Guide from the builder.

That is why keeping a record of what you received, and when, is important. If you are unsure whether you got everything, a lawyer can help you work out where you stand.

A separate right after a material change

A buyer may also rescind after a material change in the information in the disclosure statement, which is a separate right from the initial cooling-off period. So the 10-day window passing does not always end your options, but whether a change is material depends on the facts.

What happens to your money

Money a condo builder receives, including deposits, must generally be held in trust under the Condominium Act. Buyers who rescind in the cooling-off period or after a material change are paid interest at two per cent below the Bank of Canada bank rate.

If a builder does not refund a condo deposit, Tarion's deposit protection covers up to $20,000 plus a limited amount of accrued interest.

Rescinding is different from the builder cancelling. If a builder terminates a condo purchase agreement, it must return the purchaser's deposit in full within 10 days. A builder can cancel a pre-construction deal only under early termination conditions listed in Schedule A of the Tarion Addendum, and each condition must be clearly described in the purchase agreement, with a date by which it must be met. Typical permitted conditions include failing to sell enough units, being unable to secure project financing, and delays in getting building or planning approvals.

If a project is cancelled, buyers are generally entitled to their deposit back plus accrued interest at two per cent below the Bank of Canada bank rate. Since January 1, 2023, interest is paid at the Bank of Canada policy interest rate where no units were sold before that date and the developer terminates the agreement.

Using the period correctly

• Note the date you received the agreement, disclosure statement and Condo Buyers' Guide.
• Do not wait until the last day; act early.
• Read your agreement for how notice must be given, and ask a lawyer to confirm it.
• Keep proof that the builder received your notice.
• Keep copies of everything, including deposit receipts and cheques.

Some sources describe the period in business days rather than days, so do not rely on your own count. Have a lawyer confirm the deadline against the Act and your agreement.

It also helps to understand the costs that follow if you go ahead. During interim occupancy, the buyer pays an interim occupancy fee whether or not they move in, and it cannot exceed the total of monthly interest on the unpaid balance at the prescribed rate, estimated monthly municipal taxes, and projected common expenses for the unit. How all of this applies to your purchase depends on your agreement, so it is worth confirming with a lawyer before the window closes.

Frequently asked questions