Builder Delays or Cancels Your Pre-Construction Project in Ontario: Delayed Closing, Termination and Deposit Refund Rights (2026)

If your builder delays closing, the Tarion Addendum in your agreement sets the rules. The builder can push a freehold closing back twice, by up to 120 days each time, without paying you anything. Compensation of up to $7,500 only applies once closing goes past the Firm Closing Date. If the home still isn’t finished by the Outside Closing Date, you can terminate and get all your money back, plus interest and delayed closing compensation.

This guide covers the dates in your agreement, what Tarion pays, what happens to your deposit, a worked example for a townhome buyer, and your options when a project stalls. Figures are as of October 2026.

Why buyers are asking about delays now

The GTA new-home market is split. BILD’s September 2026 numbers, released October 22, 2026, show a very slow condo market and a steadier low-rise market:

• Total new-home sales: 949 in September 2026. That is 52 per cent below the 10-year average, which is 1,978 sales for a typical September.
• High-rise (condo) sales: 129 units, a record low for September. That is 40 per cent below September 2025 and 90 per cent below the 10-year average.
• High-rise inventory: 12,909 apartment units, about 49 months of supply based on the last 12 months of sales.
• Low-rise sales: 820, which is 17 per cent above the 10-year average. It is the sixth month in a row that low-rise sales beat the average.

BILD says the timelines for construction starts and completion in the HST rebate program make it harder for high-rise buyers to take part, while low-rise buyers have responded well. That is BILD’s view. Slow condo sales don’t mean a given project will be delayed. But buyers who signed in earlier years want to know what their agreement protects if a project slows down or stops.

Tentative, firm and outside closing dates

Every freehold agreement for a new home in Ontario includes a Tarion Addendum. The Addendum sets out a series of dates, and each one gives you different rights. As of October 2026, Tarion’s freehold and contract home rules work like this:

Date	How it is set	Compensation if the builder moves it?
First Tentative Closing Date	The first date in your agreement	No, if the builder gives at least 90 days’ written notice
Second Tentative Closing Date	Up to 120 days after the First Tentative Closing Date	No, if the builder gives at least 90 days’ written notice
Firm Closing Date	At most 240 days after the First Tentative Closing Date	Yes. Closing after this date can qualify for compensation
Outside Closing Date	365 days after the earlier of the Second Tentative and Firm Closing Dates	If the home isn’t complete by this date, you may terminate

Notice matters. If the builder doesn’t give notice at least 90 days before the First Tentative Closing Date, that date becomes the Firm Closing Date. The same 90-day rule applies to the Second Tentative Closing Date. Tarion’s general rule is that 90 days’ written notice is needed to change a closing date.

Condos work in a similar way, but they use occupancy dates (a Tentative Occupancy Date, then a firm occupancy date). The condo details are different, so read your own condo Addendum. Don’t assume the freehold dates above apply.

Unavoidable delays

Some events let a builder extend deadlines by the length of the delay without paying compensation. These are a strike, fire, explosion, act of God, civil insurrection, war or terrorism, or a pandemic. The builder must tell you when the delay starts, give an estimate of how long it will last, and give you written notice when it ends.

What Tarion delayed closing compensation covers

As of October 2026, Tarion’s freehold closing-delay page sets out these amounts:

• Maximum: up to $7,500 in total. It is payable if closing happens after the Firm Closing Date, or if you terminate because of delay as the Addendum allows.
• Living expenses: a fixed $150 for each day of delay, until the Delayed Closing Date or until termination. You don’t need receipts.
• Other costs: costs such as moving and storage can also be claimed, with receipts.
• Late notice: if the builder doesn’t give 10 days’ notice of a closing delay, compensation is $1,500 ($150 x 10 days).

For condos, Tarion’s coverage page lists the same $7,500 maximum. This covers $150 per day for living expenses plus costs such as moving and storage, if occupancy is delayed past the firm occupancy date and no exception applies.

Claim deadlines: send your claim to the builder within 180 days of the closing date or the termination date. If the builder doesn’t pay or disputes the claim, you can claim to Tarion within the first year of possession, or up to 365 days after termination. The claim form is on Tarion’s MyHome portal.

Worked example: a townhome with a 12-month delay

This is an illustration only. The price, deposit and delay below are assumptions we chose for the example. They are not a real project or a market average. It assumes a freehold townhome, not a condo townhome, and that the builder gave every notice on time.

Item	Example
Purchase price (assumed)	$850,000
Deposit paid (assumed 20%)	$170,000
Delay (assumed)	12 months (365 days) after the First Tentative Closing Date
First 240 days (two tentative extensions with proper notice)	No compensation
Days after the Firm Closing Date	About 125 days
Living-expense compensation at $150 a day	Reaches the $7,500 cap after 50 days
Total delayed closing compensation	Capped at $7,500
Can you terminate for delay?	Not yet. The Outside Closing Date in this example is 485 days after the First Tentative Closing Date
Tarion deposit protection (freehold, price over $600,000)	10% of price, up to $100,000 = $85,000
Deposit above Tarion’s protection limit	$85,000
Carrying cost of the delay	Depends on your rent or current housing costs. The $150 a day may cover only part of it
Mortgage rate hold	Depends on your lender. A hold can expire before a delayed closing, so ask your lender how long it lasts

Two points stand out. First, a long delay doesn’t mean large compensation, because of the $7,500 cap. Second, a 20% deposit on a home at this price is more than Tarion’s deposit protection limit. For a freehold home signed on or after January 1, 2018, the limit is 10% of the price up to $100,000.

When a deal is terminated: your deposit and interest

If you terminate after the Outside Closing Date: when the home isn’t complete by the Outside Closing Date, you have a 30-day Purchaser’s Termination Period. If you terminate during that period, Tarion says you get a full refund of everything you paid (deposits, extras and upgrades), plus interest and delayed closing compensation. Tarion’s pages don’t state the interest rate or how it is calculated, so check your Addendum or ask your lawyer.

If the builder terminates or the project is cancelled: the builder can only end the deal on grounds allowed in your agreement and Addendum. Those grounds vary, so have a lawyer read them with you. We haven’t summarised them here.

Deposit protection, freehold: for agreements signed on or after January 1, 2018, Tarion protects deposits up to $60,000 on homes priced at $600,000 or less. For homes over $600,000 it protects 10% of the price, up to $100,000. The protection applies if the builder goes bankrupt, commits a fundamental breach, or if you rescind (cancel) the agreement. It doesn’t cover money paid before the agreement was signed.

Condo deposits: Tarion’s page says condo deposits must be held in trust under the Condominium Act, and that on termination the vendor must return the deposit in full within 10 days. Tarion’s protection for condo deposits starts at $20,000, plus a limited additional amount. Confirm the current condo figures on tarion.com before relying on them.

Low-rise vs high-rise: how the risk compares

Measure (GTA, September 2026)	High-rise (condos)	Low-rise (towns, semis, singles)
Sales	129, record low for September	820, 17 per cent above the 10-year average
Inventory	12,909 units, about 49 months	7,048 homes, 11 months
BILD benchmark price (before HST rebate)	$1,031,574, unchanged from last year	$1,246,764, down 13.3 per cent in 12 months
Closing date rules	Condo occupancy dates (check your condo Addendum)	Freehold tentative, firm and outside closing dates

Total new-home inventory was 19,957 units. Strong low-rise sales don’t guarantee any project will close on time. Builders sell condo towers in advance, and a tower with slow sales and a lot of unsold supply faces more pressure than a low-rise phase that is selling. If you are still shopping, compare pre-construction townhomes and detached homes with pre-construction condos. Look closely at construction status and the dates in the agreement.

Your options when a project is delayed

• Wait. If the builder is within its tentative dates and gave proper notice, waiting is often the default. Keep every notice, and track the Firm and Outside Closing Dates.
• Accept a revised price or new terms. Some builders ask buyers to sign an amendment. Tarion warns that changing dates by mutual agreement may waive compensation you would otherwise get, so read the Addendum before you sign anything.
• Mutual release. You and the builder may agree to end the deal. Before you sign, confirm in writing how much of your deposit and upgrade money comes back, and when.
• Assign your agreement. If your agreement allows it, you may be able to sell your contract to another buyer before closing. Assignments can trigger HST and income-tax rules, including anti-flipping rules. Get tax advice before you list.

Checklist before you sign

• Read the Tarion Addendum and note your First Tentative, Firm and Outside Closing Dates.
• Check the builder’s record with the HCRA and Tarion before you commit.
• Confirm who holds your deposit and that it is held in trust as required.
• Compare your deposit with Tarion’s deposit protection limit for your price and home type.
• Ask your mortgage lender how long your pre-approval and rate hold last, and what happens if closing moves.
• Read the agreement during your cooling-off period (for condos) and have a lawyer review it before it becomes firm.

When to call a real estate lawyer, and how we help

Call a lawyer when you get a delay notice, an amendment, a price-change request or a termination notice. The same goes if you aren’t sure which date in your Addendum applies. A lawyer can tell you whether notice was given on time and whether signing something would waive compensation.

Tall Property can review your agreement with you and help you think through waiting, assigning or moving to a finished home. If you need certainty on timing, browse move-in-ready homes, which avoid construction delays. You can also look at low-rise options on our Brampton page. To book a broker review of your agreement, call 416-878-0749.

Frequently asked questions

Can I walk away if my builder delays closing?

Not just because there is a delay. Under the freehold Addendum, you can terminate if the home isn’t complete by the Outside Closing Date. You have a 30-day Purchaser’s Termination Period to do it. Before that, walking away could put you in breach of your agreement.

Do I get interest on my deposit?

Tarion says a buyer who terminates after the Outside Closing Date gets a full refund plus interest. The rate and method aren’t stated on Tarion’s pages, so check your Addendum or ask your lawyer.

How much compensation can I get for a delayed closing?

As of October 2026, up to $7,500 in total. That is $150 a day for living expenses plus receipted costs such as moving and storage. It only applies after the Firm Closing Date, or if you terminate because of delay as the Addendum allows.

Is my whole deposit protected if the builder goes bankrupt?

Not always. For freehold homes over $600,000, Tarion protects 10% of the price up to $100,000. For homes at $600,000 or less, it protects up to $60,000. Condo protection is lower and works differently.

Does my mortgage pre-approval survive a delay?

Often not. Pre-approvals and rate holds have expiry dates set by your lender. Ask your lender or mortgage broker about extensions as soon as you get a delay notice.

This is general information, not legal or tax advice. Speak to a real estate lawyer or accountant about your own agreement.