Buying new construction in Ontario means signing a contract to buy a home from the builder before it is finished, and sometimes before it is even started. The legal protections that matter most are the Tarion warranty, your deposit coverage, the cooling off period if you are buying a condominium, and a careful review of the builder’s Agreement of Purchase and Sale while you still have room to act.
This is a different transaction from buying a resale home. You commit first and the home arrives later, often a year or more later. The contract is written by the builder, not on the standard form most buyers see, and it is built to protect the builder. Delays, closing cost surprises, and clauses that favour the developer are common. The good news is that Ontario gives new home buyers real protections, and most of the risk is manageable once you understand the rules before you sign.
What counts as a new construction home in Ontario
A new construction home is a home you buy from a builder or developer that has not been lived in before. In law, two categories drive most of the rules. The first is a freehold home, where you own the land and the structure and take ownership on your closing date. The second is a condominium, where you own a unit plus a share of the common elements and the property is run by a condominium corporation.
There is also the contract home, where you already own the land and hire a builder to construct a home on it. Contract homes carry most of the same warranty protections but follow different rules for some of them, including financial loss coverage in place of delayed closing coverage. Custom, semi custom, and production homes are marketing terms for how much you can change. They matter for your budget and timeline, but the freehold or condominium distinction is what shapes your legal rights.
Resale homes are not new construction. They are generally exempt from HST and they do not come with a new home warranty, which is one reason the rules below apply only when you buy from a builder.
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Who regulates new home builders in Ontario
Two organizations regulate new home building in Ontario, and they have operated as separate bodies since February 1, 2021. The Home Construction Regulatory Authority, or HCRA, licenses builders and vendors under the New Home Construction Licensing Act, 2017. Tarion administers the new home warranty under the Ontario New Home Warranties Plan Act.
Selling a new home that has not been occupied before, without an HCRA licence, is illegal in Ontario. The HCRA can lay charges and impose penalties. It has issued penalties for unlicensed activity, including one of $181,000 against an individual who built and sold a new home without a licence and without enrolling it in the warranty program.
Before you sign anything, search your builder on the Ontario Builder Directory at the HCRA website. It shows the licence status, how long the builder has operated, how many homes it has built, and any conduct concerns, charges, or convictions. If a builder is not listed, treat that as a warning sign. This step takes a couple of minutes and is the cheapest protection you have.
How a builder’s Agreement of Purchase and Sale is different
The Agreement of Purchase and Sale for a new build is not the standard form most resale buyers sign. The builder’s lawyers draft it, and it is written to protect the builder. Reading it the way you would read a resale offer is a mistake we see often.
Attached to it you will find the Tarion Addendum, which the builder must include. The first page of the Addendum is the Statement of Critical Dates. It sets out when the builder expects to finish, the latest date the builder can extend to, and the date past which you can walk away. These dates govern your delay rights, so read them closely.
The clauses worth your lawyer’s attention include the deposit structure, the early termination conditions that let the builder cancel the project, the builder’s right to extend the closing or occupancy date, the adjustments and levies the builder can add at closing, and any assignment rights. Substitutions matter too. If the contract lets you select a finish, the builder cannot change it without your written consent. If the contract only specifies an item, the builder may substitute something of equal or better quality.
Have the agreement reviewed before you sign if you can, or inside the cancellation window if you are buying a condominium. Once that window closes, the terms are usually fixed.
Do you get a cooling off period when you buy new construction
It depends on what you are buying. If you buy a new condominium unit from the developer, you have a 10 day cooling off period. If you buy a new freehold home, you do not have a statutory cooling off period.
For a new condominium, section 73 of the Condominium Act, 1998 gives you 10 calendar days to cancel for any reason and get your full deposit back without penalty, plus any interest. Calendar days include weekends, so a Friday signing still burns the weekend. The clock starts on the later of two events, the day you receive the fully signed agreement and the day you receive the developer’s disclosure statement together with the Condo Guide. To cancel, you or your lawyer must deliver clear written notice to the developer or the developer’s lawyer inside those 10 days. Your real estate agent cannot do this for you. If the developer later makes a material change to the disclosure, a fresh 10 day right can open under section 74.
For a new freehold home, the picture is different. The Homeowner Protection Act, 2024 might create a similar 10 day cooling off period by amending the New Home Construction Licensing Act, 2017, but it has not been proclaimed into force. Current government information does not expect it before January 1, 2027. So as of this article, a freehold new build buyer is generally bound the moment the agreement is firm. Many buyers assume the condo rule applies to freehold homes too. It does not, and that assumption can be expensive.
| Question | New condominium unit | New freehold home |
|---|---|---|
| Cooling off period | 10 calendar days | None in force yet, planned but not before January 1, 2027 |
| Legal source | Condominium Act, 1998, section 73 | Homeowner Protection Act, 2024, awaiting proclamation |
| When the clock starts | Later of the signed agreement and the disclosure statement with the Condo Guide | Not applicable until in force |
| How you cancel | Written notice to the developer inside 10 days, deposit returned | No statutory exit, you are bound on signing |
If you are buying a condominium, use the 10 days. Book your lawyer and your financing review before you sign, not after, so the review happens while you can still walk away.
A buyer came to us after signing a condominium agreement, worried about a clause they had read. Because they reached out inside the 10 day window, we were able to review the disclosure and the agreement and explain their options while they still had the right to cancel. The lesson is timing. The earlier we see the contract, the more we can do.
What the Tarion warranty actually covers
Tarion provides a mandatory warranty on most new homes in Ontario, and it runs in three windows that start on your possession or occupancy date.
The one year warranty covers defects in work and materials, compliance with the Ontario Building Code, and unauthorized substitutions. The two year warranty covers water penetration, the building envelope, the electrical, plumbing, and heating systems, and Building Code violations that affect health and safety. The seven year warranty covers major structural defects.
| Coverage period | What it covers | Key form and deadline |
|---|---|---|
| 1 year | Defects in work and materials, Ontario Building Code compliance, unauthorized substitutions | 30 Day Form in the first 30 days, then Year End Form in the last 30 days of year one |
| 2 years | Water penetration, building envelope, electrical, plumbing and heating systems, health and safety Building Code violations | Second Year Form, any time during year two |
| 7 years | Major structural defects | Major Structural Defect Form, after year two and up to year seven |
There are dollar limits. For agreements signed on or after July 1, 2023, the maximum warranty coverage is $400,000 for a freehold home and $300,000 for a condominium unit. These figures are current as of publication and can change, so confirm them before you rely on them.
Your deposit is protected too, but the protection differs by home type.
| Home type | How your deposit is protected |
|---|---|
| New condominium unit | Held in trust under the Condominium Act, returned within 10 days if the builder terminates, with a Tarion backstop up to $20,000 |
| New freehold home, price $600,000 or less | Tarion coverage up to $60,000 |
| New freehold home, price over $600,000 | Tarion coverage of 10 per cent of the price, up to a maximum of $100,000 |
There is a newer step for freehold buyers. As of April 1, 2026, you should register your purchase with Tarion within 45 days of signing to keep the maximum deposit coverage. Tarion has set a transition period and is deferring the actual change to coverage until January 1, 2027, but the safe habit is to register within 45 days. Condominium deposits do not need this step because they are already held in trust.
If the builder misses the firm closing or occupancy date and no exception applies, you are entitled to delayed closing or occupancy compensation. That is $150 per day for living expenses up to a maximum of $7,500, plus receipted costs such as moving or storage. If the builder fails to give you the required 10 days notice of a delay, you receive $1,500. You claim from the builder within 180 days of closing or occupancy, and from Tarion within one year if the builder does not pay.
After you move in, you protect your warranty by filing the right form on time. You can submit a 30 Day Form in your first 30 days, and a Year End Form in the last 30 days of year one, which is your final chance to report one year items. A Second Year Form can go in any time during year two, and a Major Structural Defect Form any time from year two up to the seventh anniversary of possession. Each form you file starts a 120 day builder repair period. If the builder does not fix a covered item, you can ask Tarion to step in through conciliation. The MyHome portal handles all of this.
Put the year one deadline in your calendar the day you move in. Missing the Year End Form is the most common way buyers lose coverage they were entitled to.
What interim occupancy is and why condo buyers pay before they own
Interim occupancy applies to condominiums, and it surprises many first time condo buyers. When the municipality clears the building for occupancy but the condominium corporation is not yet registered, you can move in even though you do not own your unit yet. During this period you pay the builder an interim occupancy fee, sometimes called phantom rent.
The fee is usually made up of three parts, interest on the unpaid balance of your purchase price, an estimate of the municipal property taxes for your unit, and a projection of the common expenses, which become your condo fees. None of this money pays down your mortgage or builds equity. You are effectively renting your own future home from the builder.
Interim occupancy can last weeks or months, and you have little control over how long. You take legal ownership only at the final closing, when the corporation is registered and title transfers to you. A freehold home has no interim occupancy. You close once and own it that day.
Ask the builder for the estimated occupancy and registration dates, and budget for occupancy fees on top of your mortgage. Build the gap into your plans rather than assuming you will own on move in day.
What closing actually costs on a new build
New construction comes with closing costs that resale buyers never see, and they catch people out. The largest is usually HST.
New homes carry 13 per cent HST, made up of the 8 per cent provincial portion and the 5 per cent federal portion. Resale homes are generally exempt, which is why most buyers have never dealt with this.
The other surprise is adjustments and levies. The builder’s agreement usually lets the builder add charges at closing, such as the development and education levies the city imposes, utility and meter hookups, the Tarion enrolment fee, and similar items. These can add thousands of dollars. You can often negotiate a cap on these adjustments before you sign, and you usually cannot once the contract is firm.
On top of that come land transfer tax, which is provincial and, in Toronto, also municipal, along with your legal fees and disbursements and title insurance. First time buyers may qualify for land transfer tax rebates. Our guide on how real estate closings work in Ontario walks through these line items in more detail.
Frequently asked questions
Can I cancel a new construction purchase after I sign?
It depends on the type of home. If you bought a new condominium unit from the developer, you have 10 calendar days from the later of receiving the signed agreement and the disclosure package to cancel for any reason and get your deposit back. If you bought a new freehold home, there is no statutory cooling off period in force yet, so you are generally bound once the agreement is firm. A material change to a condominium disclosure can open a fresh 10 day window. Speak to a lawyer quickly, because these timelines are short.
Do I have to register for the Tarion warranty, or is it automatic?
The warranty comes with an enrolled new home, but you still have steps to take. Freehold buyers should notify Tarion of their purchase within 45 days of signing to keep maximum deposit coverage, a step that applies as of April 1, 2026. After you move in, you protect your coverage by submitting the warranty forms on time, especially the Year End Form in the last 30 days of your first year. Missing those deadlines can cost you coverage.
What happens if the builder pushes back my closing or occupancy date?
Builders can extend dates within limits set out in the Tarion Addendum. If the firm date is missed and no exception applies, you are entitled to compensation of $150 per day up to $7,500, plus receipted costs like moving and storage, and $1,500 if you did not get the required notice. If the home is not ready by the outside date, you may have a 30 day window to terminate. Do not sign any amendment to a date without legal advice, because it can waive your compensation.
Do I pay HST on a new home?
Yes. New homes carry 13 per cent HST, while resale homes are generally exempt.
Why am I paying occupancy fees on a condo I do not own yet?
That is interim occupancy. After the building is cleared for occupancy but before the condominium corporation is registered, you can move in but do not own the unit. The interim occupancy fee usually covers interest on your unpaid balance, estimated property taxes, and projected common expenses. None of it builds equity. You take ownership at the final closing once the corporation is registered.
Should I still get a home inspection on a brand new home?
The predelivery inspection with the builder is not the same as an independent inspection. The PDI is mainly your chance to record items that are missing, damaged, or incomplete before you take possession, which supports your warranty claims. Some buyers also arrange an independent inspection for added comfort. Either way, document everything on the PDI form. Our article on home inspections in Ontario explains what an inspection can and cannot catch.
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.
