What is different about buying pre-construction or by assignment in Ontario?

The ten-day rescission period and the disclosure statement

When you buy a condominium unit from the declarant, section 72 of the Condominium Act, 1998 requires a disclosure statement and the condominium guide. Section 73 then lets you rescind by written notice the declarant receives within ten days of the latest of receiving the disclosure statement, the guide and the agreement signed by both sides. The declarant must promptly refund every payment with interest at the prescribed rate.

If the disclosure statement later changes materially, section 74 gives a fresh rescission right. Use the ten days for a full legal review: the agreement and disclosure package can run to hundreds of pages. Freehold new homes have no statutory cooling-off period.

Deposits, the Tarion addendum and critical dates

Confirm the builder is licensed by the HCRA and the project enrolled with Tarion before paying a deposit; the deposit protection under the Ontario New Home Warranties Plan Act depends on it, and Tarion publishes the limits for condominium and freehold deposits. Deposits must be held as the Act requires.

The Tarion addendum sets the tentative and firm occupancy dates, the outside occupancy date and the notice the builder must give to extend. Miss-steps by the builder trigger delayed occupancy compensation under O. Reg. 165/08, up to a cap, and at the outside date you may be able to terminate. Keep every notice the builder sends.

Interim occupancy and the occupancy fee

Section 80 permits or requires you to occupy the unit before the condominium is registered and before you receive a deed. During interim occupancy the declarant may charge a monthly occupancy fee no greater than three amounts: interest on the unpaid balance of the price at the prescribed rate, a reasonable monthly estimate of municipal taxes for the unit, and the projected common expense contribution. None of it reduces the price.

Section 80(3) lets you elect to pay the balance in full on taking occupancy, which removes the interest component. Final closing, when title transfers and your mortgage registers, follows registration of the condominium, which can be months after occupancy. Our occupancy-fee calculator estimates the monthly figure.

Assignments: HST, consent and two closings

In an assignment the original purchaser sells its rights under the builder agreement. Builder consent is nearly always required, usually with a fee, and the assignee inherits every obligation: remaining deposits, occupancy fees, adjustments and the final closing.

Since 2022, section 192.1 of the Excise Tax Act treats the assignment of a new-housing agreement as a taxable supply, so HST applies to the assignment consideration, with specific rules for the part that reimburses deposits; the assignor collects it. The assignee can claim the new housing rebate only if it will occupy the unit as a primary residence. Land transfer tax is assessed on the full value of the consideration you give. Two agreements means two closings and two legal fees.

Closing costs that surprise pre-construction buyers

• Development and education levies, unless the agreement caps them: get the cap in writing before signing.
• Utility and water meter charges, tree planting, driveway and similar builder schedule items.
• The Tarion enrolment fee, often passed on to the buyer.
• HST on upgrades, and repayment of the HST rebate if you do not occupy the unit.
• Property taxes assessed on land only at first, followed by a supplementary bill for the unit.
• Occupancy fees for as long as registration takes.