Buying a pre-construction home in Ontario means signing a contract with a builder for a home that has not been built yet, then waiting months or sometimes years for it to be finished. Three protections matter most along the way, the Agreement of Purchase and Sale you sign, your right to cancel in the opening days of a condo deal, and the Tarion warranty that backs your deposit and the finished home.
This guide explains what each protection does, what the home will really cost once tax and fees are added, how long the process runs, and where buyers most often get caught. Several of the rules changed between 2024 and 2026, so a few figures below are new and worth confirming before you act on them.
Freehold or condo, why the difference matters from day one
The first question to settle is what you are actually buying. A freehold home means you own the house and the land under it outright. A condominium means you own your unit plus a share of the common elements, and a condo corporation governs the building.
This is not a technicality. Your right to cancel, the way your deposit is held, when your mortgage starts, and parts of your warranty all depend on which one you are buying. The table below sets out the differences that affect you as a buyer.
| Feature | Pre-construction freehold | Pre-construction condo |
|---|---|---|
| What you own | The home and the land | Your unit plus a share of the common elements |
| Cooling off period | None yet as of 2026, see below | 10 days under the Condominium Act |
| Deposit handling | Protected by Tarion within set limits | Held in trust under the Condominium Act, plus a Tarion backstop |
| Moving in vs closing | You close and move in together | Interim occupancy first, then final closing once the condo is registered |
| Occupancy fees | Not applicable | Payable during interim occupancy |
| Warranty | Tarion 1, 2, and 7 year coverage | Tarion coverage on your unit, plus separate coverage for common elements |
Do you get a cooling off period to change your mind?
If you are buying a pre-construction condo from the builder, yes. Section 73 of the Condominium Act, 1998 gives you a 10 day cooling off period. You can cancel for any reason, with no penalty, and the builder must return your deposit with interest.
The 10 days are calendar days, weekends included. The clock starts on the later of two dates, the day you receive a copy of the signed agreement and the day you receive the disclosure statement together with the Residential Condominium Buyers’ Guide. Use those days. This is the window to have a lawyer read the agreement, confirm your financing, and decide with a clear head.
Here is a point most guides skip. Under section 72(2) of the same Act, you are not bound by the agreement until the developer has delivered the disclosure statement and the Buyers’ Guide. If those documents were never properly delivered, the 10 day clock may never have started, and the agreement may not bind you at all. If you think your disclosure package was incomplete, that is worth a lawyer’s review.
New freehold homes are different. As of 2026, there is no automatic cooling off period for a new freehold home in Ontario. The Homeowner Protection Act, 2024 created one, but the cooling off provisions are not in force yet and have reportedly been deferred to January 1, 2027. Until they are proclaimed, you are bound when you sign a freehold agreement, subject only to any conditions you negotiated into it. Confirm the current status before you rely on this, because the proclamation date can move.
So what should you do. For a condo, treat the 10 days as a hard deadline and book your legal review the moment you sign. For a freehold home, get the review done before you sign, because there may be no second chance.
What your lawyer checks in the Agreement of Purchase and Sale
The Agreement of Purchase and Sale, or APS, is the contract that controls the whole deal. Builder agreements are long, and they are drafted to protect the builder. A review by a real estate lawyer experienced in pre-construction is where you find the clauses that can cost you later.
Here is what we look at most closely.
- Material change clauses. Builders often reserve the right to change square footage, layout, finishes, or the location of amenities. You want clear limits on what they can change and a right to walk away if a change is significant.
- Caps on development charges and levies. Municipal charges can rise before closing. Without a cap written into the agreement, that increase lands on you, sometimes in the thousands.
- Assignment rights. An assignment lets you sell your contract before final closing. Some builders restrict it, charge a fee for it, or forbid it. If you might need to assign, negotiate this early.
- The Tarion Addendum and the Statement of Critical Dates. This sets the firm occupancy or closing date and the limited ways the builder can extend it. It drives your timeline.
- HST and the rebate. Many builder prices are quoted as HST included, which assumes you qualify for the new housing rebate and assign it to the builder. Confirm that assumption fits your plan.
- Deposit terms. How much, on what schedule, and where the money is held.
So what should you do. Get the full agreement to your lawyer with the disclosure package, not just the signature page, and do it inside the cooling off window for a condo or before signing for a freehold home.
How Tarion and the HCRA protect your deposit and your home
Two organizations stand behind a new home in Ontario, and they do different jobs. The Home Construction Regulatory Authority, the HCRA, licenses and disciplines builders and vendors. It has done this since February 1, 2021 under the New Home Construction Licensing Act, 2017. Before you sign with any builder, search the free Ontario Builder Directory to confirm the builder is licensed and to see any conditions or history on the licence. Beyond the directory, look at the builder’s completed projects, read reviews from past buyers, and visit a finished development if you can.
Tarion administers the warranty itself, under the Ontario New Home Warranties Plan Act. The warranty protects you at three stages, your deposit before closing, delays to your move in, and defects after you take possession.
Deposit protection
If your builder becomes insolvent or fundamentally breaches the agreement so the deal cannot close, Tarion protects your deposit within set limits.
| Type of home | Deposit protection |
|---|---|
| Freehold, price $600,000 or less | Up to $60,000 |
| Freehold, price over $600,000 | 10 percent of the price, up to a maximum of $100,000 |
| Condominium unit | Held in trust under the Condominium Act and returned within 10 days if the builder terminates, with a Tarion backstop up to $20,000 plus limited interest if it is not returned |
A change to note for freehold buyers. Starting April 1, 2026, you should register your purchase with Tarion within 45 days of signing your agreement to qualify for the maximum deposit coverage. Tarion has deferred the related coverage changes to January 1, 2027. Buyers who register late may fall under a separate fund with a lower limit. These figures are current as of 2026 and can change, so confirm them before you rely on them.
Delayed closing or occupancy compensation
If the builder misses a firm closing or occupancy date and no valid exception applies, you may be owed compensation. The maximum under the warranty is $7,500. That includes $150 per day for living expenses such as accommodation and meals, with no receipts required for that daily amount, plus other costs like moving and storage if you keep the receipts.
There is an exception. An unavoidable delay, such as a strike, a fire, or another event outside the builder’s control, can extend the dates without triggering compensation, as long as the builder gives you proper notice.
Warranty coverage after you move in
Once you take possession, Tarion coverage runs in three layers, each starting on your possession date.
- One year. The home must be built to the Ontario Building Code, fit to live in, and free of defects in work and materials, with no unauthorized substitutions from what you were promised.
- Two years. Coverage for water penetration, the electrical, plumbing, and heating delivery systems, the building envelope, and exterior cladding.
- Seven years. Major structural defects, meaning problems with the load bearing parts of the home.
The warranty travels with the home, so if you sell inside those periods the remaining coverage passes to the next owner. You make claims through Tarion’s online MyHome portal within set windows, and the first of those is tied to your inspection before move in.
Before you get your keys, you and the builder do a pre delivery inspection, the PDI. Walk through the home, test what you can, and write down anything missing, damaged, or not working on the official form. That record is what supports a warranty claim later, so take your time with it. An independent home inspection at your own cost is also worth considering.
What a pre-construction home actually costs
The sticker price is only part of what you pay. Plan for the deposit schedule, the tax, and a set of closing costs that resale buyers often do not face.
Deposits
Pre-construction deposits are usually larger than resale deposits and are paid in installments over time. For condos, the total often runs to 15 or 20 percent of the price, spread across several payments in the first year. Confirm the schedule and where the money is held before you sign.
HST
New homes carry 13 percent HST. On many builder deals the price is quoted as HST included, which works only if you qualify for the new housing rebate, assign it to the builder, and move in as your primary residence. If you buy to rent the unit out, you generally cannot assign that rebate to the builder.
Occupancy fees on a condo
If you buy a condo, there is usually a gap between the day you move in and the day the building is legally registered. During that interim occupancy period you pay occupancy fees to the builder. These are not mortgage payments and they do not build equity. They roughly cover the interest on your unpaid balance, an estimate of the municipal taxes, and an estimate of the common expenses. Buyers often call this phantom rent, and it can run for months. Your mortgage usually does not start until final closing, after registration.
The other costs to budget for
- Development charges, levies, and similar adjustments, which is exactly why you want them capped in the agreement.
- Upgrades and finishes beyond the base model, which can add up quickly.
- Land transfer tax, charged across Ontario, with a second municipal land transfer tax if the home is in Toronto.
- Legal fees and disbursements, title insurance, and adjustments the builder charges back at closing.
How long it takes, and what happens if the builder is late
Timelines on pre-construction are long and they move. For a condo, you usually take interim occupancy first, then reach final closing only once the building is registered, which can be months later. For a freehold home, occupancy and closing typically happen together.
Your firm dates live in the Tarion Statement of Critical Dates that comes with the agreement. The builder can extend within the limits set there, and an unavoidable delay can push dates further without compensation. If a firm date passes without a valid exception, the delayed closing or occupancy compensation described above applies, up to $7,500.
Projects can also be cancelled outright, for example when a builder cannot get financing or sell enough units. If that happens, you are generally entitled to your deposit back, usually with interest, but you lose the home and the time.
So what should you do. Read the Statement of Critical Dates closely, write the firm dates in your calendar, and build a buffer into any plan that depends on moving in on schedule, such as selling your current home.
Frequently asked questions
Can I cancel a pre-construction condo agreement after I sign?
Yes, within the 10 day cooling off period under the Condominium Act. You can cancel for any reason in those first 10 calendar days and get your deposit back with interest. After the window closes, you are bound, and the ways out are narrow and usually depend on something the builder did, such as a material change to the disclosure or a failure to deliver the required documents. Speak to a lawyer quickly if you are past day 10.
Is there a cooling off period for a new freehold home in Ontario?
Not yet, as of 2026. The Homeowner Protection Act, 2024 created a 10 day cooling off period for new freehold homes, but it is not in force and has reportedly been deferred to January 1, 2027. Until it is proclaimed, a freehold agreement binds you when you sign. Because the date can change, confirm the current status before you decide.
What happens to my deposit if the builder goes bankrupt or cancels the project?
You are protected within limits. For a freehold home, Tarion deposit protection runs up to $60,000 if the price is $600,000 or less, or 10 percent of the price up to $100,000 above that. For a condo, your deposit is held in trust under the Condominium Act and must be returned within 10 days if the builder terminates, with a Tarion backstop up to $20,000 if it is not. If a project is cancelled, you generally get your deposit back, often with interest.
Do I have to pay HST on a pre-construction home?
Yes, new homes carry 13 percent HST.
What are occupancy fees, and why do I pay them before I own the condo?
Occupancy fees apply during the interim occupancy period on a condo, the gap between moving in and the building being registered. You pay the builder an amount that roughly covers interest on your unpaid balance, estimated property taxes, and estimated common expenses. The money does not build equity and is not a mortgage payment. Your mortgage usually starts at final closing, once the condo is registered.
Do I need a lawyer to buy pre-construction, and when?
Yes, and earlier is better. For a condo, get a lawyer to review the agreement and disclosure inside the 10 day cooling off window. For a freehold home, get that review before you sign, because there is no cooling off period yet. A review at the right moment is far cheaper than trying to fix a binding agreement after the fact.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
