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Fergus: (519) 772-6139
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New and Pre-Construction Home Purchases

A buyer of a pre-construction condominium unit in Ontario has ten days to cancel the agreement without penalty. A buyer of a new freehold home has no such right: the agreement binds the buyer the moment it is signed.

Either way, the time for a legal review is short. Once the ten-day window closes, or once a freehold agreement is signed, the terms governing closing dates, price adjustments, and the buyer's remedies are fixed.

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How Foote Law Can Help

Foote Law acts for buyers of new and pre-construction homes, from the agreement of purchase and sale through to final closing:

  • Review of the agreement of purchase and sale within the ten-day rescission period.
  • Confirmation that the disclosure statement and the Residential Condominium Buyers' Guide were delivered as required.
  • Preparation and delivery of a notice of rescission.
  • Review of the Tarion Addendum and the Statement of Critical Dates.
  • Negotiation of caps on development charges, levies, and other adjustments the builder charges at closing.
  • Registration of a freehold purchase agreement with Tarion to secure full deposit protection.
  • Interim occupancy and final closing on a condominium unit.
  • Claims for delayed closing or delayed occupancy compensation.

Foote Law accepts Legal Aid Ontario certificates and Employee Assistance Program referrals. Call Foote Law in Orangeville at (519) 940-8309 or in Fergus at (519) 772-6139. Foote Law serves clients in Orangeville, Fergus, Brampton, Shelburne, Alliston, Barrie, Owen Sound, Newmarket, Guelph, Centre Wellington, and throughout the Greater Toronto Area, in person and virtually.

The Ten-Day Window

Section 73 of the Condominium Act, 1998 gives a buyer of a pre-construction condominium unit ten days to rescind the agreement, meaning to cancel it outright, for any reason, without penalty, and without explanation.

The ten days are calendar days, so weekends and holidays count. The period does not begin until the buyer has received all three required documents: the fully signed agreement of purchase and sale, the disclosure statement, and the Residential Condominium Buyers' Guide.

To rescind, the buyer delivers written notice to the builder (called the declarant under the Act) or to the builder's lawyer before the period expires. The deposit is then returned with interest.

The right belongs only to a buyer purchasing from the builder. It does not apply to a resale condominium, an assignment purchase, or a purchase made through the listing system.

When the Right Extends Past Ten Days
& Freehold Homes Are Different

When the Right Extends Past Ten Days

The agreement is not binding until both the disclosure statement and the Buyers' Guide have been delivered. Where the builder has not delivered them, the ten-day period never begins and the right to rescind remains open. Until delivery, the builder cannot enforce the agreement.

A material change to the disclosure statement opens a fresh ten-day period, running from the buyer's receipt of the amended disclosure. A buyer who lets that period pass is treated as having accepted the change.

Freehold Homes Are Different

There is no statutory cooling-off period for a new freehold home. The Homeowner Protection Act, 2024 provides for one, but it has not yet been proclaimed in force. Until it is, a freehold agreement binds the buyer from signing, which means the legal review must happen before the buyer signs rather than after.

For agreements signed on or after January 1, 2027, a buyer of a new freehold home should register the purchase agreement with Tarion within 45 days of signing. Tarion deferred this requirement from its original start date of April 1, 2026. Registering on time secures the maximum deposit coverage; a late registration shifts the claim to a separate, capped fund.

What Protects the Deposit &
What the Builder Adds at Closing

What Protects the Deposit

On a freehold home, where the agreement was signed on or after January 1, 2018, Tarion protects the deposit up to $60,000 where the purchase price is $600,000 or less. Where the price is above $600,000, the protection is 10% of the purchase price, to a maximum of $100,000. This protection matters because a freehold deposit is usually paid directly to the builder, with no trust account and no third-party oversight.

A condominium deposit is protected in two layers. First, the Condominium Act, 1998 requires the builder to hold the deposit in trust, and where the agreement is terminated the deposit must be returned in full within ten days. Second, where the deposit was not held in trust or is not returned, Tarion provides up to $20,000. That amount is a backstop rather than first-dollar coverage, and a builder holding a deposit above it must secure the excess separately.

What the Builder Adds at Closing

The purchase price is not the amount payable on closing. A builder's agreement typically permits adjustments that are charged back to the buyer, and unless the agreement caps them, the amount is open-ended. Common adjustments include:

  • Development charges and municipal levies.
  • The Tarion enrolment fee.
  • Utility connection and meter installation charges.
  • The condominium corporation's initial capitalization, on a condominium purchase.
  • Upgrades and finishes beyond the base specification.

Land transfer tax, HST, legal fees, and disbursements are payable in addition. Capping the adjustments is a negotiation, and it has to happen before the agreement becomes binding.

Interim Occupancy, When the Builder Is Late
& The Warranty

Interim Occupancy

  • A pre-construction condominium purchase closes twice. On the interim occupancy date, the buyer moves in and takes possession without yet owning the unit. On final closing, once the condominium corporation is registered, title transfers to the buyer and the mortgage funds. The interim period commonly runs several months and can exceed a year.
  • During interim occupancy, the buyer pays a monthly occupancy fee to the builder. Under section 80 of the Condominium Act, 1998 and Ontario Regulation 48/01, the fee has three components: interest on the unpaid balance of the purchase price, the estimated monthly property taxes for the unit, and the estimated monthly common expenses projected in the proposed declaration.
  • Section 80(4) prevents the builder from profiting from the fee. The buyer should understand, however, that none of it reduces the purchase price or builds equity; it functions much like rent.

When the Builder Is Late

  • Where occupancy or closing is delayed beyond the firm date and no exception applies, the builder must compensate the buyer. Compensation under the warranty is capped at $7,500.
  • It includes a fixed $150 per day for living expenses such as meals and accommodation, which requires no receipts, together with other costs caused by the delay, such as additional moving and storage, which must be supported by receipts.
  • The builder's obligation is suspended during an unavoidable delay: a strike, fire, explosion, act of God, civil insurrection, act of war or terrorism, or a pandemic. In that case the builder must notify the buyer at the outset, estimate how long the delay will last, and give written notice as soon as it ends.

The Warranty

  • One year, covering defects in work and materials, unauthorized substitutions, and failure to comply with Ontario's Building Code.
  • Two years, covering water penetration, defects in the electrical, plumbing, and heating delivery systems, and major defects in exterior cladding.
  • Seven years, covering major structural defects.

Statutory warranty coverage begins on the date of possession and runs in three periods.

Where the first agreement of purchase and sale was signed on or after July 1, 2023, the maximum coverage is $400,000 for a freehold home and $300,000 for a condominium unit. Coverage of the common elements begins when the condominium corporation is registered, and claims for those areas are made by the corporation rather than by individual owners.

Buying a New or
Pre-Construction Home?

For a pre-construction condominium, the ten-day window is the only point at which the agreement can be cancelled without cause, and it runs on calendar days. For a new freehold home, there is no window at all, so the review has to happen before signing. In either case, early legal advice is what keeps the buyer's options open.

(519) 940-8309 Orangeville (519) 772-6139 Fergus
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