Buying a pre-construction detached home in Ontario

Have the agreement reviewed before you sign

A new detached home from a builder is usually freehold, and a freehold purchase does not come with the 10-day cooling-off period that new condos have. Once you sign, you are committed. Have a lawyer who knows new builds review the agreement first, and line up your mortgage pre-approval.

Deposits are paid in stages

Instead of one deposit, you usually pay several over the first year or so. Tarion's deposit protection covers deposits on new freehold homes up to a set limit, so ask your lawyer how much of yours is protected.

Budget for closing costs

On top of land transfer tax and legal fees, new homes come with adjustments such as development charges, utility connection fees and Tarion enrolment. Ask for these to be capped in your agreement, and ask your lawyer what a realistic total looks like. How HST and any rebate apply depends on whether you will live in the home or rent it out, so confirm that with your lawyer or accountant early.

Dates move

Closing dates in the agreement are often tentative, and builders are allowed to extend them within set limits. Plan your current housing with that in mind.

Check the lot and the upgrades

Ask for the lot size and grading plan, which way the backyard faces, and what is included as standard. Upgrades chosen at the design centre are added to the price, so set a budget before your appointment.

Know your assignment rights

If your plans change before closing, you may be able to sell your agreement to another buyer. Whether you can, and what the builder charges, is set by the assignment clause, so negotiate it at the start. See how assignment sales work.