From registering interest to final closing: the 10-day cooling-off period, the phantom rent formula, interim occupancy, and what Tarion covers.
Buying a pre-construction condo in Ontario is a fundamentally different transaction from buying a resale unit. You're committing money years before you take possession, the deposit structure is regulated but substantial, and there are legal rights and risks that don't exist in resale. Understanding these before you sign the Agreement of Purchase and Sale (APS) is essential.
This guide follows the process in the order it actually happens, from the sales centre through to getting your keys.
Most new Toronto condo projects sell a large portion of their units before the general public can access them. The sequence is typically: platinum agents first (agents who have a sales relationship with the developer), then VIP agents, then the general agent community, then public sales. Registering directly with the developer usually puts you in the public or VIP tier depending on the project.
When you visit the sales centre, you'll see renderings, a model suite, a floor plan catalogue, and pricing sheets. The sales staff work for the developer. They're knowledgeable about the project but their job is to sell units. Have a real estate lawyer review the APS before you sign anything. This is not optional.
The APS for a pre-construction condo is a long document, typically 50-100 pages including schedules. Key things your lawyer will review: the deposit structure, the permitted delay provisions (which allow the developer to push occupancy dates without penalty), what changes the developer can make to the unit without your consent (often including minor size changes up to a specified percentage), the upgrade and option selection process, and the assignment provisions.
Under sections 72-74 of the Condominium Act 1998, you have statutory rescission rights after signing. These are the 10-day cooling-off period.
Once you sign the APS and receive both the signed agreement and the disclosure statement (plus the Condominium Authority of Ontario's guide to pre-construction purchases), a 10-calendar-day clock starts from the later of those two events. During those 10 days, you can rescind the agreement for any reason and receive a full refund of your deposit.
This 10-day window is your only unconditional exit. If a material change to the disclosure statement occurs after the cooling-off period, section 74 requires the developer to notify you and your 10-day right resets. Material changes include things like a significant reduction in unit size or changes to the amenities described in the disclosure. Minor changes don't qualify.
Don't treat the cooling-off period as a formality. Use it to have your lawyer review the full APS and disclosure statement. Ask specifically about: the deposit structure and whether deposits are held in trust, the permitted delay provisions, the assignment clause, any caps on increases to maintenance fees in the first year, and the developer's track record on completing projects on time.
Pre-construction condo deposits in Ontario are typically 15-25% of the purchase price, paid in installments over the first year to 18 months after signing. A common structure for a Toronto project might be: 5% on signing, 5% at 90 days, 5% at 180 days, and 5% at 365 days. Some higher-priced projects require more.
Under Ontario law, deposits on pre-construction condos must be held in a solicitor's trust account or a prescribed account until occupancy or return. They're also protected by the Condominium Authority of Ontario's insurance scheme up to a maximum. Confirm with your lawyer exactly how the deposits are protected in your specific APS.
Pre-construction condos in Toronto rarely close on their original projected date. The APS will include a "firm closing date" (the developer's commitment date) and a series of permitted extensions they can use without your consent, typically amounting to 12-24 months of total extensions. After the permitted delays expire, you have the right to terminate and receive your deposit back.
Tarion Warranty Corporation administers the new home warranty program for pre-construction condos. For occupancy delays beyond the permitted periods, Tarion provides compensation to buyers. The amounts and conditions are set out in Tarion's Addendum, which is a mandatory schedule to every APS in Ontario.
When your unit is ready, you'll receive a notice of occupancy. You can move in, but the building hasn't been registered as a condominium yet. During this interim occupancy period, you don't own the unit legally. You occupy it as a tenant of the developer under a regulated formula.
Under section 80 of the Condominium Act, the monthly interim occupancy fee (often called phantom rent) is calculated as follows:
Interest on the unpaid balance of the purchase price, calculated at the Bank of Canada conventional one-year mortgage rate
+ Estimated monthly property tax for the unit
+ Estimated monthly common expenses for the unit
The unpaid balance is the purchase price minus your deposits. So if you paid $150,000 in deposits on a $700,000 unit, the interest component is calculated on $550,000. You're not building equity during this period and you're not paying down a mortgage. The phantom rent goes entirely to the developer.
Interim occupancy periods in Toronto have historically ranged from a few months to over a year. During this period, you can usually rent the unit out (subject to APS terms), but you cannot sell it as a resale unit until after condo registration. Assignment is the only exit option, and assignment rights depend on what your APS allows.
When the building is registered as a condominium with the Province of Ontario, you complete the purchase. Your lawyer handles the closing, you take title to the unit, and your mortgage begins. Any adjustments between the phantom rent paid and the actual maintenance fee are settled at this closing. You also pay any closing costs itemized in your APS: development levies, utility connection fees, and other builder charges that weren't included in the original price.
Read those closing cost sections in your APS carefully before you sign. Pre-construction buyers are sometimes surprised by $20,000-$40,000 in extra charges at closing that were disclosed in the APS schedules but not emphasized at the sales centre.
If you're looking to buy or sell a pre-construction unit before registration, read the assignment sales guide.
Assignment Sales Guide