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What if the builder cancels your new condo construction?

Region: Ontario Answer # 0430

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.

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