The Pre-Construction Condo Survival Guide (Ontario)

Cooling-off periods, deposits, phantom rent, surprise closing costs — what buying a condo from a floor plan really involves.

Who this is for: Ontarians thinking about — or already committed to — buying a brand-new condominium from a builder, before it's built. What you'll get: a plain-language walkthrough of how pre-construction differs from a resale, your rights during the cooling-off period, how deposits and occupancy work, the closing costs that catch people off guard, and a pitfalls checklist.

⚖️ This is a general guide, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.

Buying pre-construction means signing a contract today for a unit that may not exist for two, three, or more years. The marketing suite is polished; the legal reality is more complicated. This guide is the honest version — the rights you have, the costs you'll face, and the traps that surprise first-time buyers.

1. How pre-construction differs from a resale

When you buy a resale condo, you're buying a finished unit from an owner. You can see it, get an inspection, and close in a couple of months.

Pre-construction is fundamentally different:

• You buy from a floor plan, not a finished unit. Layouts, finishes, and even square footage can change within limits the contract allows.
• The builder's contract is long and builder-friendly. It's drafted to protect the developer. Reading it (with a lawyer) matters far more than with a standard resale agreement.
• There are two "closings," not one — an interim occupancy (you move in but don't own yet) and a final closing (you take title). More on this below.
• Timelines are long and can slip. Construction delays are common, and the contract usually permits them.
• Closing costs are larger and stranger — development charges, levies, utility hook-ups, and warranty enrolment fees that don't exist on a resale.

💡 Tip: The brochure is marketing; the Agreement of Purchase and Sale and disclosure statement are the deal. If they disagree, the documents win.

2. The 10-day cooling-off period

Ontario gives buyers of new residential condominiums a statutory cooling-off period — a window of 10 days after you receive the signed agreement and the disclosure statement, during which you can cancel the purchase for any reason and get your deposit back. This right comes from the Condominium Act, 1998 and is one of the most important protections you have.

A few key points:

• The clock generally runs from the later of when you receive the executed agreement and when you receive the disclosure statement.
• It is a cool-off, not a try-before-you-buy — use it to have your lawyer review the contract and disclosure statement properly.
• It applies to new condos from the developer, not resale condos.

⚠️ Watch out: Ten days is not long. The day you sign, send the full package to a real estate lawyer immediately so the review happens inside the window. Once the period closes, walking away usually means losing your deposit (and potentially more).

✅ Use the cooling-off period to: have a lawyer review the agreement and disclosure statement, confirm deposit and occupancy terms, and sanity-check the closing-cost exposure.

3. Reviewing the disclosure statement

The disclosure statement is the package the developer must give you describing the condominium as it's planned. It can be hundreds of pages. Buried in it are the things that shape your ownership for years. A lawyer reviewing it during the cooling-off period will look for:

• The proposed declaration, by-laws, and rules — what you can and can't do (pets, short-term rentals, etc.).
• The budget and estimated monthly common expenses (condo fees) — and how realistic they look. Builder budgets in year one can be optimistic; fees often rise after the developer hands over control.
• The reserve fund plan — money set aside for major repairs.
• Whether there's a first-year budget deficit and who covers it.
• Amenities and what's actually being delivered versus rendered in marketing.
• Right to make changes — the developer's ability to alter the building, the unit, or the timeline.
• Special assessment risk and any shared facilities.

💡 Tip: Ask specifically about rental and short-term-rental restrictions if you plan to rent the unit out. Some buildings prohibit it. The Residential Tenancies Act, 2006 governs tenancies generally, but the condo's own rules can still limit your ability to lease.

4. Deposit structure and deposit protection

Pre-construction deposits are larger and paid in instalments, not all at once. A common structure spreads the total deposit across several payments — for example, an amount on signing, then further amounts at fixed intervals (e.g., 30/90/180 days and on occupancy). The exact schedule is set by the developer and varies by project — read your agreement for the real numbers.

The crucial protection: in Ontario, deposits on new freehold and condominium homes are protected, within limits, through Ontario's new-home warranty system, which is administered by Tarion (the warranty provider — the HCRA is the separate regulator that licenses builders and vendors). If the builder becomes insolvent or fails to close, your deposit is protected up to a maximum coverage amount.

⚠️ Verify the current coverage: Deposit-protection limits and the warranty framework are set by regulation and change over time. Confirm the current maximum and what's covered directly with Tarion/HCRA before you rely on a number — do not assume an amount you read somewhere.

💡 Tip: Make sure each deposit cheque is payable to the developer's lawyer in trust (or as the agreement directs) — not to a marketing company or a personal account. Your lawyer confirms this.

5. Interim occupancy and occupancy fees ("phantom rent")

This is the part that surprises almost everyone.

In a new condo building, you usually get to move into your unit before you legally own it. This stage is called interim occupancy. The building isn't yet registered as a condominium with the land registry, so the developer can't transfer title yet — but your unit is ready, so they let you occupy it.

During interim occupancy, you pay the developer a monthly occupancy fee. People call it "phantom rent" because:

• You're paying to live there, but you don't own the unit yet and you're not building equity — it's not a mortgage payment.
• The fee typically approximates (a) interest on the unpaid balance of the purchase price, (b) an estimate of the municipal property taxes for the unit, and (c) an estimate of the monthly common expenses (condo fees).

Interim occupancy can last months — sometimes much longer — depending on how quickly the developer registers the building. You pay occupancy fees the whole time, and that money generally does not reduce what you owe on final closing.

⚠️ Watch out: Budget for occupancy fees as a real, recurring cost. On a higher floor or in a building that registers slowly, "phantom rent" can add up to thousands of dollars before you ever take title.

💡 Tip: Some buyers in interim occupancy aren't allowed to rent the unit out until final closing or registration. If your plan is to lease immediately, confirm whether the agreement permits it.

6. Final closing

Final closing happens after the building is registered as a condominium. This is when you actually take title and your mortgage funds. At final closing you:

• Pay the balance of the purchase price (the part not covered by deposits), usually with mortgage financing.
• Pay the closing costs unique to new builds (see the next section).
• Stop paying occupancy fees and start paying your regular condo fees, property taxes, and mortgage.

⚠️ Watch out — financing risk: Your mortgage pre-approval from when you signed may have expired by final closing, and rates or your finances may have changed. Builders can also assign a final closing date on relatively short notice once the building registers. Line up financing early and keep your lawyer in the loop.

7. Closing costs unique to new builds

This is the single biggest source of sticker shock. On a resale, your closing costs are relatively predictable. On a pre-construction unit, the developer's agreement often passes through a long list of extra charges. Common ones:

HST and the new-home HST rebate (verify the details): New residential homes in Ontario are subject to HST under the Excise Tax Act. For many buyers, the advertised price already has the HST and the new-housing HST rebate built into it — if you qualify (typically by buying as your or a close relative's primary residence). If you don't qualify — for example, you're buying purely as an investment to rent out — you may have to pay the full HST on closing and then apply for a rebate yourself (such as the new residential rental property rebate), which can mean fronting a substantial sum.

First-time buyers — the new FTHB GST Rebate: As of 2026, a separate federal First-Time Home Buyers' GST Rebate can recover up to $50,000 of the GST (the federal part of the HST) on a new home — full relief up to a $1 million price, phasing out between $1 million and $1.5 million. It generally requires that your agreement of purchase and sale with the builder was signed on or after March 20, 2025 and before 2031, that you're a first-time home buyer taking the home as your primary residence, and that you're the first person to occupy it. It interacts with the existing new-housing rebate rather than simply stacking on it — ask your lawyer to work out your actual position.

⚠️ This is where investors get hurt. If the unit isn't your principal residence, you may owe tens of thousands in HST at closing that you'll only recover later by rebate. Do not guess — the rebate rules, amounts, and thresholds change. Confirm your exact HST and rebate position with a real estate lawyer and the CRA before you firm up the deal.

💡 Tip: Ask your lawyer to estimate total closing costs before the cooling-off period ends, and push to cap development charges and levies in the agreement. A cap can save you thousands.

8. The basics of assignment

An assignment is when you (the original buyer) sell your contract to buy the unit to someone else before final closing — the new buyer steps into your shoes and closes with the developer. People do this to exit a deal, or to profit if the unit's value rose during construction.

Key things to know:

• Assignment usually requires the developer's consent, and the agreement often charges an assignment fee and imposes conditions (sometimes it's prohibited or restricted until a certain point).
• There can be tax consequences. The profit on an assignment may be treated as income or capital gain, and HST can apply to the assignment in certain cases. The treatment depends on your circumstances and the rules in effect.
• It's a specialized transaction — both the assignor and assignee should have legal advice.

⚠️ Watch out: Assignment is not a casual flip. The tax and HST treatment can materially change your return, and rules in this area have tightened. Verify the current tax/HST treatment with a tax professional and your lawyer before counting on a number.

9. Construction delays and the Tarion warranty

Delays are normal in pre-construction, and the developer's agreement typically allows them to push dates. Ontario does, however, regulate how and when occupancy/closing dates can be set and changed for new condos, and builders must follow the delayed-occupancy framework that applies to condominiums — which can entitle you to compensation if occupancy is delayed beyond what the rules permit (subject to limits and notice requirements). The specifics live in your agreement and the warranty rules.

The Tarion warranty (Ontario's statutory new-home warranty, with the HCRA regulating builders) protects more than your deposit. Coverage commonly includes (subject to terms, exclusions, and time limits):

• Protection against certain deposit losses and delayed occupancy.
• Coverage for defects in work and materials for an initial period.
• Coverage for major structural defects for a longer period.

⚠️ Verify the current warranty terms and time limits — coverage periods, caps, and the claims process are set by regulation and change. Check directly with Tarion/HCRA and document defects carefully (there's a process and deadlines for reporting them, including a pre-delivery inspection).

✅ At occupancy, do a careful pre-delivery inspection and note every deficiency — that list is the start of your warranty claims.

10. Pitfalls checklist

• Didn't use the cooling-off period. Send everything to a lawyer the day you sign — you have only ~10 days.
• Ignored the disclosure statement. Condo fees, rules, and rental restrictions are in there.
• Underestimated closing costs. Development charges, levies, hook-ups, HST, and Tarion fees add up — get an estimate early and cap the levies if you can.
• Forgot about occupancy fees. "Phantom rent" is real money for months, building no equity.
• Assumed the HST rebate applies. If it's an investment, you may pay full HST on closing and rebate later.
• Let financing lapse. Your pre-approval may expire before final closing; re-confirm early.
• Counted on a flip via assignment without checking consent rights and tax/HST treatment.
• Skipped the pre-delivery inspection or didn't document deficiencies for warranty.
• Didn't budget for delay. The deal may close far later than the brochure suggested.

Mini-FAQ

Can I cancel after the 10-day cooling-off period? Generally no — not at will. After the period closes, you're bound by the contract. Cancelling usually means losing your deposit and possibly facing further consequences. Get advice before the window ends.

Is my deposit safe if the builder goes under? Ontario's new-home warranty system protects deposits up to a maximum. Confirm the current coverage limit with Tarion/HCRA and make sure deposits are paid into the proper trust account.

Why am I paying "rent" on a place I bought? That's the occupancy fee during interim occupancy — you live in the unit before the building is registered and you can take title. It's not a mortgage payment and doesn't build equity.

Do I really need a lawyer for a brand-new condo? Yes — arguably more than for a resale. The builder's contract is complex and one-sided, the closing costs are larger, and the cooling-off review is time-sensitive.

How Treadstone Law can help

Pre-construction is where a lawyer earns their keep. Treadstone Law reviews builder agreements and disclosure statements inside your cooling-off window, estimates your true closing costs, pushes to cap development levies, flags HST and rebate exposure, and handles both your interim occupancy and final closing — with flat-fee pricing and all-province virtual service.

• Cooling-off review — fast turnaround so you decide with eyes open.
• Closing-cost estimate — no surprises at final closing.
• Flat fees and online intake — start at treadstonelaw.ca/start-file.

Visit treadstonelaw.ca/real-estate, see treadstonelaw.ca/pricing, or start your file at treadstonelaw.ca/start-file. Questions first? Call 1-844-900-1070.

This is not legal advice

This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws, tax rates, and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.