A Comprehensive Guide to Understanding Pre-Construction Condominium Deposits and Fees

Pre-construction condos are becoming an increasingly popular option for prospective home-buyers in the Toronto , Brampton , Hamilton , or GTA due to the rising housing prices and limited supply. However, pre-construction condos come with their own set of fees and deposits that buyers need to be aware of. and Mo

Down-Payment & Deposits

Pre-construction condos usually require a higher down payment compared to resale condos. While a 5% down payment is typical for resale units, pre-construction units usually require 20% or more in down payments. To make it easier for buyers, developers offer a deposit structure that is an installment plan for the down payment. For example, a typical deposit structure for a 20% down payment could look like this:Click here for know about the Difference Between Your Deposit and Down Payment

  • $5,000 with the offer
  • Balance of 5% due in 30 days
  • Next 5% in 90 days
  • Next 5% in 180 days
  • Final 5% at occupancy

Some developers even offer limited-time pre-launch deposit structures that are even more buyer-friendly, such as split over 365 days instead of 180 days. Closer to completion, deposit structures tend to be more flexible and it is usually possible to negotiate the fee structure with the builder to extend or reduce your payments.

Cooling-Off Period
After putting down a deposit on a pre-construction condo, buyers are entitled to a 10-day cooling off period to reevaluate their purchase decision. Click here to know Consumer Protection Act.

During this time, buyers should have their Agreement of Purchase and Sale reviewed by a real estate lawyer and get their finances in order. If the buyer decides to back out of the contract during the cooling off period, they can do so without any deductions to the deposit. So,here some  pros and Cons of living in a condo.

Closing Costs:

Closing costs are additional expenses that buyers need to pay between the time they make the offer and the day they close. These costs include home inspection fees, legal fees, land transfer taxes, etc. It is suggested that buyers budget and save an additional 1.5% to 4% of the purchase price of their homes to cover these closing costs, which could be higher for pre-construction condo units.These costs include home inspection fees, legal fees, land transfer taxes etc.

It is suggested that buyers budget and save an additional 1.5% – 4% of the purchase price of their homes, in order to cover these closing costs. For pre-construction condo units, that number can be even higher.

When you buy a new condo, you may be subject to additional fees, including:

  • Development and educational levies ($200-$4,000)
  • New Home Warranty Plan enrolment fee ($900-$1,200)
  • Utility hook-up fees ($50-$500)
  • Assignment fees (if you sell before final closing, or flip your unit) ($3,000)
  • Occupancy fees

These additional costs are project- and builder-specific, and some may even be included in the sale price of the unit (e.g. see HST below).

During the cooling off period, buyers should have their lawyer review the Agreement of Purchase and Sale to determine which additional closing costs will be incurred.

It is recommended to use a real estate lawyer who has dealt with the same project developer in the past, since they would be able to better anticipate any issues that they have had in the past while closing other client’s deals with that developer.

Condo Reserve Fund

When buying pre-construction, buyers will need to contribute at least two months of condo fees to the condo’s reserve/emergency fund. This is usually levied at the time of closing. Again, read (or have your lawyer read) the Agreement of Purchase and Sale carefully!

Occupancy fees

When the condo is built and a buyer’s unit becomes ready to be moved into, there is a period of interim occupancy, where the Buyer can “take possession” i.e. move into the unit, but not yet own the unit. This is because titles cannot be transferred until the WHOLE building is complete. Only after completion will the unit ownerships be handed over to buyers. Buyers can start making mortgage payments after that.

During the period of interim occupancy, the Buyer does not yet own the condo; they simply pay the builder an amount roughly equal to what their mortgage payment + condo fees + taxes will equal. Many buyers choose to take advantage of the occupancy period and move into the units, especially if at the time they are renting a place where the rent is higher than the occupancy fee for their new unit.

However, the drawbacks should be noted: most of the building’s amenities will not be open for use, and there will likely be a lot of noise in and around the building, as the builder finishes other units and general sections of the building. Buyers can elect to avoid occupancy fees by paying the entire purchase price with cash at the occupancy date. However, these terms must have already been put into the Agreement of Purchase and Sale before the end of the cooling off period.


Unlike resale condos, pre-construction condos are subject to HST, which builders generally factor into the purchase price of the unit and pay on behalf of the buyer. However, if a buyer will be living in the unit themselves, they will likely qualify for an HST rebate. Note that most builder prices assume this, and so this rebate is often already factored in as well. For investors, there is also a rebate opportunity, but to be eligible they need to rent the condo out for at least a year, with adequate proof of doing so , It is highly recommended to get professional legal advice about potential HST rebate qualifications beforehand.

The Final Word

With so many fees and closing costs, it is no surprise that many pre-construction condo buyers find themselves facing larger than expected bills around closing time. However, with due diligence and legal advice, any buyer can confidently navigate these waters and land their brand-new, dream condo home. In conclusion, buying a pre-construction condo comes with its own set of fees and deposits that buyers need to be aware of. It is essential to carefully review the Agreement of Purchase and Sale, have it reviewed by a real estate lawyer, and budget for additional closing costs. additionally here some good fact about How much is a condo down payment in Toronto?

If you’re a prospective first-time homebuyer on the fence about making the leap in Upcoming years, consider that mortgage rates are in a great place right now, and that the Canadian government has made it a bit easier to afford a home in Upcoming years

Contact us if you’re looking for a Pre-construction condo in the GTA.



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