When purchasing a condominium that has not been built yet (pre-construction condos), buyers should be aware that the project can be cancelled even after they have made a deposit on the unit they are buying. The conditions under which a builder or vendor may cancel the project are detailed in two documents which are part of the Agreement of Purchase and Sale that buyers are given when purchasing their condominium:

1. The Condominium Home Addendum (Tentative Occupancy Rate), and
2. The Condominium Home Addendum (Firm Occupancy Date)

When can a builder/vendor cancel a new condo building project?

Builders or vendors can cancel the project and terminate the purchase agreement for several reasons, including:

• They are unable to sell enough condo units
• They are unable to secure financing for the project
• There are delays in obtaining the required building or planning approvals

Are buyers refunded their deposit with interest?

Under the Condominium Act, in most cases, funds that a builder of a condo project receives, including deposits and certain other payments covered by the purchase agreement, must be held in trust. If a condo project is cancelled, a builder is generally required to refund all monies paid, including interest, to buyers.

Under the Ontario New Home Warranties Plan, if a buyer is not refunded their deposit, they may be able to make a claim with Tarion. Tarion protects deposits and some other payments for up-to a maximum of $20,000.

More information

For more information about condominiums and to view provincial legislation, visit our Links section. Additional information can also be found in topic 417 Buying a new or resale condo.

If you are purchasing a condominium, your lawyer can help you better understand all the documents and obligations that apply to the condominium corporation and your unit.

Need help with a Deposit?

A Home Deposits Now Guarantee provides a stress-free alternative to obtaining a deposit. You do not need to borrow from friends and family, liquidate investments and pay breakage and interest fees, or obtain certified cheques, a line of credit, or bridge financing. Home Deposits Now issues a Guarantee that your Realtor submits along with your offer, instead of a cash deposit or certified cheque. For a quote, use the Cost Calculator.

The online application takes only minutes to complete. Visit Home Deposits Now to apply for a Deposit Guarantee.

								
You now have 3 options:
								

									
More answers about Real Estate Law
									
Master List: 2,500 Legal Answers
																													
																		
Government Links