Pre-Construction Deposit Structures in Ontario: How They Work and How Your Deposit Is Protected

A pre-construction deposit structure is the schedule of deposits you pay a builder between signing and closing. In Ontario, Tarion protects those deposits up to a limit: up to $20,000 for condos, and up to $100,000 for freehold homes depending on the price, as of October 2026. For condos, the builder also has to hold your money in trust.

Below is how the schedules work, what the protection covers, and what to check before you sign.

How a deposit schedule works

You rarely pay your whole down payment on the day you sign. The agreement of purchase and sale sets out a series of deposits due on fixed dates or at set points after signing. The first is normally due when you sign, and the rest follow over the months after. The balance of the price is paid on closing, usually with a mortgage.

Every builder sets its own schedule. It can differ from project to project, and even between releases of the same project. Read the deposit section of your agreement line by line. The brochure is not the contract.

The schedule decides three things for you:

• Cash flow: how much money you need on hand, and when.
• Risk: how much of your money sits with the builder before the home is finished.
• Protection: how much of that money is covered if the sale doesn’t close. Tarion’s coverage has limits, so a large total deposit may not be fully covered.

Extended deposit structures

An extended deposit structure spreads your payments over a longer period instead of asking for most of the deposit soon after signing. That can make it easier to save while the project is built. Before you pick a project for its schedule, compare the total you’ll pay before closing, not just the first payment.

Condo or freehold: the rules differ

What protects your deposit depends on what you’re buying. For a unit in a pre-construction condo, the Condominium Act requires the builder to hold your deposit in trust, and Tarion coverage is capped at $20,000. For a freehold home, such as many pre-construction detached homes and some new townhomes, Tarion’s freehold limits apply. Some townhomes are sold as condominium units, so confirm which one yours is.

What Tarion covers

Tarion backs new home warranties in Ontario. As of October 2026, it protects deposits, up to a limit, if the sale isn’t completed because:

• the builder goes bankrupt;
• the builder fundamentally breaches the purchase agreement; or
• the purchaser has a statutory right to treat the agreement as terminated.

Full details are on Tarion’s deposit protection page.

Coverage limits

As of October 2026:

Agreement	Purchase price	Maximum Tarion deposit coverage
Freehold, signed on or after Jan 1, 2018	$600,000 or less	Up to $60,000
Freehold, signed on or after Jan 1, 2018	Over $600,000	10% of the purchase price, to a maximum of $100,000
Freehold, signed before Jan 1, 2018	Any	Up to $40,000
Condominium unit (any date)	Any	Up to $20,000

Anything above your limit is not covered by Tarion. If your total deposit runs past the cap, that part is your risk.

The 45-day registration rule for freehold buyers

Tarion describes a change for freehold purchasers. Those who register with Tarion within 45 days of signing qualify for maximum deposit coverage. Those who register later, or not at all, fall under a separate $15 Million special fund with an annual sub-limit. The change was set to take effect April 1, 2026, but Tarion is deferring these deposit coverage changes to January 1, 2027, as a transition period. Check Tarion’s page for the current status before you sign, and register promptly either way.

Condo deposits: trust, interest and cooling-off

The Condo Authority of Ontario (CAO) explains that, generally, funds a builder receives for a condo project must be held in trust. That includes deposits and certain other payments covered by the purchase agreement. In most cases, buyers get their deposit back plus accrued interest if the project is cancelled.

Tarion adds that if the builder terminates the agreement, the deposit must be returned in full within 10 days. If the builder doesn’t return it, Tarion provides up to $20,000. Tarion also advises speaking to a lawyer before you treat an agreement as terminated.

Interest on condo deposits

Interest is calculated under the Condominium Act regulation (O. Reg. 48/01 s.19). According to the CAO:

• The standard rate is two per cent below the Bank of Canada bank rate.
• From Jan 1, 2023, the rate is the Bank of Canada’s “policy interest rate” instead, but only if no units in the project were sold before Jan 1, 2023 and the developer terminates the agreement.
• Two per cent below the bank rate still applies if you rescind within the 10-day cooling-off period or after a material change in the disclosure statement.

What you actually receive depends on the Bank of Canada rate while your money was held, so look up the current rate rather than relying on an old figure.

The 10-day cooling-off period

Condo buyers get a 10-day cooling-off period that starts after they receive certain documents. The agreement isn’t binding until you have both the disclosure statement and Ontario’s Residential Condominium Buyers’ Guide (Condominium Act ss.72-73). Use those 10 days to have a lawyer review the agreement, deposit schedule included.

When a builder can cancel

The CAO lists typical cancellation conditions: not selling enough units, not getting project financing, and delays in building or planning approvals. Find these in your agreement so you know when the builder can end the deal and what happens to your deposit if it does.

Making a Tarion deposit claim

Ask Tarion for a Deposit Refund Claim Form. You’ll need your purchase agreement and your cancelled deposit cheques. Tarion gives the builder the documents and a chance to respond. Assessment may take up to six months, or longer if the claim is disputed or complex. Keep copies of every cheque, receipt and amendment from the day you sign.

If you can’t make a deposit payment

Missing a payment is a different situation from a builder cancelling. The consequences come from the default clauses in your own agreement. If a payment looks tight, talk to your lawyer and contact the builder’s representative or your agent before the due date. Don’t assume a late payment will be accepted. We cover this in more detail in our separate post on missed pre-construction deposit payments.

Before you sign

• List every deposit amount and due date, and add them up.
• Compare that total with the Tarion limit for your home type and price.
• For a freehold home, register with Tarion promptly after signing.
• For a condo, confirm you have the disclosure statement and the Residential Condominium Buyers’ Guide, and note when your 10-day cooling-off period ends.
• Read the cancellation conditions and the default clauses.
• Keep copies of the agreement, all amendments and every cancelled deposit cheque.
• Have a real estate lawyer review the agreement.

Finding current deposit structures

Builders change deposit structures often, sometimes between releases or for a limited-time offer. We show a project’s deposit structure on its Tall Property page once the builder has confirmed it. To compare projects taking buyers now, start with our Selling Now list or the Toronto pre-construction page. If a page doesn’t show a deposit structure yet, call us at 416-878-0749 for the current schedule.

Frequently asked questions

How much of my deposit does Tarion protect?

As of October 2026, up to $20,000 for a condo unit. For a freehold home signed on or after Jan 1, 2018, up to $60,000 if the price is $600,000 or less, or 10% of the price to a maximum of $100,000 if it’s over $600,000.

Is my condo deposit held in trust?

Generally, yes. The CAO says funds a builder receives for a condo project, including deposits, must be held in trust under the Condominium Act.

Do I get interest if a condo project is cancelled?

In most cases you get your deposit back plus accrued interest. The rate is set by the Condominium Act regulation and tied to Bank of Canada rates.

Can I back out of a pre-construction condo after signing?

You have a 10-day cooling-off period that starts after you receive the disclosure statement and the Residential Condominium Buyers’ Guide. After that, your rights depend on your agreement, so speak to a lawyer.

This is general information, not legal or tax advice; speak to a real estate lawyer about your own agreement before you sign.