Buying
Pre-Construction Deposit Structure in Ontario
6 min readPublished
Quick answer
A pre-construction deposit structure is the schedule of payments you make to the builder between signing and closing. Each project sets its own. For new condos, the Condominium Act requires deposits to be held in trust. For new freehold homes, Tarion protects deposits up to $60,000 on homes priced at $600,000 or less, and 10% of the price up to $100,000 above that.
Key facts: pre-construction deposit structures in Ontario
| Who sets the schedule | The builder, in the agreement of purchase and sale; it varies by project |
|---|---|
| Condo deposits | Held in trust under the Condominium Act, 1998 |
| Condo backup protection | Tarion covers up to $20,000 if a deposit was not placed in trust |
| Freehold at or below $600,000 | Deposit protected up to $60,000 |
| Freehold above $600,000 | 10% of the price, up to $100,000 |
| Freehold registration | Notify Tarion within 45 days of signing (from April 1, 2026) |
| Upgrades and extras | Payments for upgrades count within the same Tarion limits |
What a deposit structure is
When you buy a resale home you pay one deposit when your offer is accepted and the rest on closing. Pre-construction works differently. You sign today for a home that may not be finished for years, and the builder asks for the deposit in instalments over that time. The schedule of instalments is the deposit structure.
The structure is written into the agreement of purchase and sale. It is set by the builder for each project, and sometimes for each release within a project, so two buildings on the same street can ask for very different amounts. The deposit is part of the purchase price, not an extra cost: at closing it is credited against the price, and the balance is paid from your own funds and your mortgage.
The deposit is also the builder's security. If you do not close, the agreement usually lets the builder keep it and claim any further loss. That is why the size and timing of the schedule matter as much as the price.
Example deposit schedules (illustrations only)
These examples show the shapes deposit structures take. They are not quotes, and they are not a claim about what most builders ask. Always read the schedule in the actual agreement.
- Condo, spread over construction: a fixed amount on signing, then instalments at set intervals (for example 30, 90, 180 and 365 days after signing), and sometimes a further instalment at occupancy
- Condo, extended: smaller instalments stretched over a longer period, sometimes offered at launch or as an incentive
- Freehold townhome or detached: a larger first payment with the rest within the first months, often set as dollar amounts rather than percentages
- Assignment purchase: you usually reimburse the original buyer's deposits in full at signing, so the cash needed up front can be higher than on a new purchase
How condo deposits are protected
For a new condominium unit, the Condominium Act, 1998 requires the builder to hold your deposit money in trust. That is the first layer of protection. The builder can only use deposit money in limited ways that the Act allows, for example when it is secured by approved deposit insurance.
The second layer comes from the new home warranty. If for some reason a condo deposit was not placed in trust and the builder does not refund it after a cancellation or fundamental breach, Tarion covers up to $20,000. The Condominium Act also has rules on interest on deposits, which your lawyer will show on the statement of adjustments at closing.
How freehold deposits are protected
New freehold homes (detached, semi-detached and freehold townhomes) do not have the Condominium Act trust rules, so Tarion's deposit protection is the main safeguard. If the price is $600,000 or less, your deposit is protected up to $60,000. Above that, it is protected up to 10% of the price, to a maximum of $100,000. Payments for upgrades and extras count within the same limits.
Since April 1, 2026, freehold buyers must notify Tarion of their purchase within 45 days of signing to qualify for the maximum coverage. Tarion has deferred the change in coverage for late or missing registrations to January 1, 2027, but registering early costs nothing and removes the doubt.
Any amount you pay above the Tarion limit is not covered by the warranty program if the builder fails. If a builder asks for more than the limit, ask your lawyer about paying into a lawyer's trust account, lowering the deposit, or other security.
- $550,000 home: deposit protected up to $60,000
- $900,000 home: deposit protected up to $90,000
- $1,400,000 home: deposit protected up to $100,000
Planning your cash for deposits and closing
- Map every deposit date against your savings and income; a missed deposit can be a default under the agreement
- Keep the rest of the down payment ready: your lender will want the full down payment at closing, not just the deposits
- Get a mortgage pre-approval now, but expect the lender to re-qualify you at closing under the stress test (the higher of 5.25% or your rate plus 2 points)
- Budget for closing adjustments such as development charge increases, utility connection fees and land transfer tax
- Remember the appraisal: if the home is valued below your price at closing, you pay the gap
Deposits on assignments and cancellations
If you sell your unit by assignment before closing, the buyer normally reimburses the deposits you paid, and the builder keeps holding the original deposits for the unit. On the purchase side, an assignee pays those deposits back to the seller up front, so the cash needed on signing can be larger than on a new purchase.
If the builder cancels the project or fundamentally breaches the agreement, it must return your deposits. If it does not, you can claim under Tarion's deposit protection within the limits above. If you are the one who fails to close, the agreement usually lets the builder keep the deposits, and Tarion's protection does not apply.
Questions to ask before you sign
- What is the full deposit schedule, in dollars and dates, and is any of it due at occupancy?
- Who holds the deposits, and in what kind of account?
- For freehold: does the schedule go above the Tarion limit for this price?
- Are there caps on closing adjustments such as development charges?
- Is the unit assignable, and what does the builder charge to consent?
- Is the builder licensed? Check the HCRA's Ontario Builder Directory
- This guide is general information, not legal or tax advice. Rules change and every agreement is different, so have a real estate lawyer review your agreement and speak to an accountant about tax before you sign.
Key takeaways: pre-construction deposit structures in Ontario
- Every project sets its own deposit schedule; read the one in your agreement.
- Condo deposits must be held in trust; Tarion backs up to $20,000 if they were not.
- Freehold deposits are protected up to $60,000, or 10% up to $100,000 above $600,000.
- Freehold buyers should register with Tarion within 45 days of signing.
- Plan for the full down payment and closing costs, not only the deposits.
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Pre-construction deposit structures in Ontario: frequently asked questions
How much deposit do I need for a pre-construction condo in Ontario?
It depends on the project. Each builder sets its own schedule in the agreement, usually as several instalments between signing and occupancy. Ask for the schedule in dollars and dates before you sign, and plan for the rest of your down payment at closing.
Is my pre-construction deposit safe if the builder goes bankrupt?
For a condo, deposits must be held in trust under the Condominium Act, and Tarion covers up to $20,000 if a deposit was not placed in trust. For a freehold home, Tarion covers up to $60,000 on homes up to $600,000, and 10% of the price up to $100,000 above that. Amounts above those limits are not covered by Tarion.
Do I get my deposit back if the project is cancelled?
If the builder cancels or fundamentally breaches the agreement, it must return your deposit. If it does not, you can claim under Tarion's deposit protection within its limits. The HCRA can also penalise builders who cancel agreements unethically.
Can I negotiate the deposit structure?
Sometimes. Builders occasionally offer extended or reduced deposit schedules, especially at launch or on slower-selling units, but nothing obliges them to. Ask, and get any change written into the agreement.
Sources
- How does deposit protection work on new homes? — Tarion
- Just bought a new home? Register it with Tarion
- Pre-construction condos — Condominium Authority of Ontario
- Condominium Act, 1998, S.O. 1998, c. 19 — Ontario e-Laws
- Ontario Builder Directory — Home Construction Regulatory Authority (HCRA)
- Administrative penalties for Ontario home builders — HCRA
- Minimum qualifying rate for uninsured mortgages — OSFI
Published by Summitly, the website of Coldwell Banker Summit Realty, Brokerage, registered with the Real Estate Council of Ontario (RECO); an independently owned and operated Coldwell Banker franchise. Broker of Record: Waqar Afzal. Questions or corrections: our contact form. How we write and check these pages: editorial policy.
Cite this guide
Summitly Editorial. (2026, September 28). Pre-Construction Deposit Structure in Ontario. Summitly (Coldwell Banker Summit Realty, Brokerage). https://www.summitly.ca/guides/pre-construction-deposit-structure-ontario
Guide URLs never change. Section links are stable too.
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