Toronto Pre-Construction Condo Guide 2026

1. How Pre-Construction Works

Buying pre-construction means purchasing a condo before it's built, based on floor plans, renderings, and model suites. You're essentially entering into a contract with the developer to purchase a unit that will be delivered in 3-5 years.

Advantages

Lower initial capital outlay (deposits over time)
Potential appreciation during construction
First pick of floor plans and views
Brand new unit with modern finishes
Tarion warranty protection
Time to save for closing costs

Disadvantages

Can't see actual unit before buying
Long wait (3-5 years typical)
Market and interest rate risk
Developer risk (delays, bankruptcy)
Final unit may differ from plans
Occupancy fees before closing

The process begins at a sales centre where you review floor plans, pricing, and incentives. Once you select a unit, you sign a purchase agreement and begin making deposit payments according to the schedule.

2. Understanding the Deposit Structure

Pre-construction deposits are typically 15-20% of the purchase price, paid in installments. This structure lets you spread payments over 1-2 years while the building is being planned and constructed.

Typical Deposit Structure (20% Total)

On signing$5,000 - $10,000

30 days - balance to 5%~$40,000

90 days - additional 5%~$50,000

180 days - additional 5%~$50,000

On occupancy - final 5%~$50,000

Total Deposits (for $1M condo)$200,000

Deposit Protection

Deposits are held in trust and protected by Tarion up to $20,000. For amounts above $20,000, you become an unsecured creditor if the developer fails. Some buyers request deposits be held in a lawyer's trust account until occupancy for additional protection.

3. The Pre-Construction Timeline

Day 1

Purchase

Sign agreement, 10-day cooling off period, begin deposits.

Year 1-2

Planning & Permits

Developer secures approvals, sells enough units to secure financing.

Year 2-4

Construction

Building goes up. You may receive construction updates.

~6 weeks before occupancy

Pre-Delivery Inspection (PDI)

Walk through your unit, note any deficiencies to be fixed.

Year 3-5

Occupancy

Move in, pay occupancy fees (interest + taxes + maintenance).

6-18 months after occupancy

Registration/Closing

Building registers as condo. You close, pay balance, take title.

Delays are common. Most projects experience 6-24 month delays. The Condominium Act allows developers to extend occupancy dates up to 365 days beyond the original estimate without penalty. Plan accordingly.

4. Choosing a Developer

The developer's reputation and track record are crucial. A well-established developer with completed projects is generally safer than a newcomer, though even reputable developers can have issues.

Research Checklist

Number of completed projects
On-time delivery history
Quality of past buildings
Tarion claims history
Financial stability
Reviews from past buyers
Current project pipeline
Experience in the area

Well-Established Toronto Developers

These developers have strong track records (this is not an endorsement):

TridelMenkesDanielsGreat GulfPembertonConcertMODLifetime

Red Flags in Developers

No completed projects in their portfolio
History of significant delays or cost overruns
Multiple Tarion complaints
Aggressive sales tactics or pressure to sign quickly
Unwillingness to provide references from past buyers

5. Selecting Your Unit

Without seeing the actual unit, you're relying on floor plans and renderings. Here's what to prioritize:

Floor & View

Higher floors command premiums but offer better views and less noise. South and west exposures get more sun. Check what's being built nearby that could block views.

Layout Efficiency

Look at usable square footage. Long hallways, odd angles, and columns waste space. Rectangular layouts are most efficient for furniture.

Parking & Locker

Consider if you need parking now and in the future. Parking spaces sell separately ($50K-$100K+). Lockers add storage and resale value.

Position in Building

Corner units have more windows. Avoid units near elevators, garbage chutes, or amenities (noise). End units often have better layouts.

Tip: If possible, visit a completed building by the same developer to see actual finishes and quality. Model suites are often upgraded beyond standard specifications.

6. Understanding the Contract

Pre-construction agreements are complex legal documents. Always have a real estate lawyer review the agreement before your 10-day cooling off period expires.

Key Contract Elements

Purchase Price & Deposits: Total price and payment schedule
Occupancy Date: Estimated date and delay provisions
Specifications: Finishes, appliances, features included
Closing Costs: Development charges, Tarion fees, levies
Assignment Clause: Ability to sell before closing
Capping Provisions: Limits on additional charges at closing

Hidden Closing Costs

Budget for these additional costs at closing (typically $15,000-$40,000):

Development charges
Tarion enrollment fee
Education levy
Section 37 contributions
Utility hook-up fees
Common area upgrades
Legal fees
Land transfer tax

10-Day Cooling Off Period: By law, you have 10 calendar days to cancel without penalty. Use this time to have your lawyer review the contract and ensure you're comfortable with the terms.

7. Assignment Sales

An assignment is when you sell your purchase agreement to another buyer before the building is registered. You're not selling the property (you don't own it yet) but rather your right to purchase it.

Assignment Costs

Developer fee: $3,000-$10,000
Marketing fee: Sometimes 1-2% of profit
Legal fees: $1,500-$3,000
Real estate commission: If using agent
HST on profit: If applicable

Tax Implications

Assignment profits are typically taxed as business income, not capital gains. This means 100% of profit is taxable at your marginal rate. HST may also apply if CRA determines you're in the business of flipping properties.

Not all developers allow assignments, or they may restrict them until after occupancy. Check your contract carefully. In a down market, assignments can be difficult to sell, and you may take a loss.

8. Risks to Consider

Market Risk

Property values can decline during construction. You may close on a unit worth less than you paid, or have trouble securing financing at closing.

Interest Rate Risk

Rates you qualify for at closing may be much higher than when you signed. A 2% increase on a $600K mortgage adds $600/month to payments.

Developer Failure

If the developer goes bankrupt, you lose deposits beyond $20,000 Tarion coverage and the years you've waited.

Delays

Construction delays of 1-2 years are common. This affects your life plans, financing terms, and carrying costs.

Quality Issues

The finished product may not match expectations. Finishes may be lower quality, layouts may feel different than the floor plan suggested.

Personal Circumstances

Your life can change significantly in 3-5 years. Job changes, relationships, family - all can affect your ability or desire to close.

9. Insider Tips

Work with an Agent

The developer pays the commission, so it costs you nothing. An experienced agent knows which projects and developers to trust, can negotiate upgrades, and protects your interests.

Negotiate Upgrades, Not Price

Developers rarely discount prices (it affects all sales), but often include upgrades: premium finishes, parking, locker, or reduced deposits.

Buy During VIP or Platinum Access

Early buyers get the best selection and often better pricing. Sign up for agent VIP access to get priority.

Consider Resale Values

1-bedroom + dens and 2-bedrooms resell better than studios or micro units. Corner units and higher floors also hold value better.

Read the Declaration

The declaration outlines rules, pet policies, rental restrictions, and more. Make sure you can live with them.

Factor in All Costs

Your true cost includes: deposits, closing costs, land transfer tax, occupancy fees, and potentially higher mortgage rates than today.

10. Frequently Asked Questions

How much deposit do I need for a pre-construction condo in Toronto?

Typically 15-20% of the purchase price, paid in installments over 1-2 years. A common structure is: $5,000-$10,000 on signing, balance to 5% in 30 days, 5% at 90 days, 5% at 180 days, and 5% at occupancy. Some developers offer extended deposit structures.

Can I sell my pre-construction condo before it's built (assignment)?

Yes, most developers allow assignments (selling your contract) for a fee of $3,000-$10,000 plus a percentage of profits. However, some restrict assignments or require builder consent. Assignment profits are taxed as income, not capital gains.

What is the difference between occupancy and closing?

Occupancy is when you can move in (building substantially complete but not registered). You pay occupancy fees (phantom rent) to the developer. Closing is when the building registers as a condo and you take legal ownership. This gap can be 6-18 months.

What does Tarion warranty cover for new condos?

Tarion provides warranty coverage for new homes in Ontario: deposit protection up to $20,000, 1-year coverage for workmanship/materials, 2-year coverage for major systems, and 7-year coverage for structural defects. Common elements have similar coverage.

What if the developer goes bankrupt before completing the building?

Tarion protects deposits up to $20,000. Beyond that, you become an unsecured creditor. This is why researching developer track record is crucial. Some buyers keep deposits in escrow until occupancy for additional protection.

Should I hire a real estate agent for pre-construction purchases?

Yes, and it costs you nothing - the developer pays the commission. An experienced agent can negotiate upgrades, help you choose the best unit, review contracts, and advise on which projects and developers to trust.

Important Consideration