Pre-Construction
Condos in Toronto
Buying before the building exists sounds like a leap of faith. Here's what you actually need to know before you sign anything.
You're Buying a Unit That Doesn't Exist Yet
Pre-construction means signing an Agreement of Purchase and Sale (APS) with a developer before — sometimes years before — the building is complete. You're not buying a physical home. You're securing the right to purchase a specific unit at today's price, with your deposits held in trust until the building is registered and title transfers to you.
The appeal is straightforward: lock in now, take ownership later, and hope the market moves in your favour in the meantime. The risk is equally straightforward: a lot can change between signing day and closing day. Understanding the four stages of a pre-con transaction is the first step to buying with your eyes open.
You choose a unit from floor plans, sign the APS, and pay your first deposit — typically 5% of the purchase price. Ontario law provides a mandatory 10-day cooling-off period after signing: during this window, you can rescind without any penalty. Use it. Have a real estate lawyer review the full agreement, not just the price page.
Over the months following signing, additional deposits come due — commonly 5% every 30–90 days until you've put 15–20% into escrow. These funds are legally required to be held in trust and are protected even if the developer runs into financial difficulty or the project is cancelled.
When your unit is substantially complete, you get the keys — but you don't own it yet. During this occupancy phase, you pay the builder a monthly occupancy fee: interest on the unpaid balance, plus estimated property taxes, plus condo fees. Think of it as paying a form of rent to the builder. This period can last anywhere from a few weeks to several months.
Once the entire building is registered with the municipality, legal title transfers to you. This is the moment your mortgage funds, you pay all remaining closing costs — including the statement of adjustments — and you officially become the owner. The gap between occupancy and final closing is one of the most commonly misunderstood parts of the process.
Deposits, Occupancy Fees, and Closing Day Surprises
The deposit structure is the part most buyers underestimate. Unlike a resale purchase where your deposit holds the deal and everything else is paid at closing, pre-construction requires you to put 15–20% into escrow in stages over the months following signing — before construction even begins in earnest.
Below is a typical deposit schedule on a $750,000 unit. The exact structure varies by developer and project, but the shape is representative.
Why People Buy Pre-Con — and Where It Can Go Wrong
Pre-construction is not inherently better or worse than resale — it's a different kind of bet. The upside is real. So is the downside. The buyers who do well are the ones who go in understanding both sides of the ledger.
- Lock in today's price — you buy at current market value and take ownership years later. If prices rise, your equity builds before you've paid a cent of mortgage.
- Lower entry capital — 15–20% in staged deposits controls a full asset before the building is complete.
- Brand new with warranty — Tarion coverage means you won't inherit anyone else's deferred maintenance or hidden defects.
- Customization window — many developers allow early buyers to select finishes, upgrades, or layouts before construction locks in.
- Delivery delays — construction timelines routinely slip by 1–2 years. The closing date in the APS is almost always an estimate, not a commitment.
- Market risk — if prices fall between signing and closing, you still owe the original price. Your mortgage may also re-qualify at less favourable terms.
- Interim occupancy costs — paying occupancy fees while your mortgage hasn't funded yet can be a meaningful monthly strain, especially if you're also renting elsewhere.
- Project cancellations — they happen. You'd get your deposits back, but not your time, opportunity cost, or the appreciation you expected.
Five Things to Check Before You Put Pen to Paper
The sales centre is designed to generate excitement. That's not a criticism — it's just how they work. Your job as a buyer is to slow down enough to verify the things the brochure doesn't highlight. These five checks should happen before your 10-day rescission window closes.
Pre-Con Without the Guesswork
Pre-construction can be a smart move — or a frustrating multi-year experience if you go in without the right guidance. The sales centre has a team of people whose job is to get you excited. Your agent's job is the opposite: to help you read past that excitement and understand what you're actually agreeing to.
Working with Dave means having someone in your corner who will walk through the APS with you, flag anything unusual in the deposit structure or adjustment clause, help you compare the pre-con unit against resale alternatives at the same price point, and give you a realistic picture of what you'll actually owe on closing day — not just the purchase price.
Pre-construction also opens up assignment opportunities that most buyers don't know to ask about. If the right deal is out there, it pays to work with someone who knows how to find it.
Before You Sign, Let's Talk
A 30-minute call before you commit to a pre-construction purchase could save you thousands — and a lot of surprises at closing.
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