Development charges are fees a municipality collects to help pay for the roads, sewers, parks, transit, and emergency services that new growth needs, and on a pre-construction condo in Toronto the builder passes a portion of them to you as a closing cost. The amount is written into your agreement of purchase and sale, and it comes due in a single payment on your final closing date rather than when you first sign.
In Ontario these fees exist because of the Development Charges Act, which lets a city like Toronto pass a bylaw recovering the cost of servicing new buildings. The city bills the developer, and most pre-construction contracts include a clause, often labelled levies or development charges, that lets the developer recover a defined share from each buyer. Your lawyer will find it sitting among the adjustments at closing, and because it counts as part of the purchase, HST usually applies on top of the figure.
The number can be steep. Recent City of Toronto charges for a new apartment unit have run into the tens of thousands of dollars, and a contract that leaves these fees uncapped exposes you to whatever the city is charging years later when the building finally registers. That is why the cap matters. During the ten-day rescission window after you sign, your lawyer can press the builder to set a firm ceiling on what you will pay, so a mid-project increase lands on the developer rather than on you.
The rules are shifting. Toronto paused indexing of its charges for 2025 and 2026, and a 2025 amendment moved the payment timing for many projects to occupancy, part of a wider provincial effort to lower the cost of building. The levy still reaches the buyer, though, so the clause is worth reading closely before you commit. A resale condo carries none of this, since the charges were settled when the building first closed. When your unit does close, the amount shows up on your statement of adjustments, separate from the interim occupancy fees you pay while waiting for that day to arrive.
Related reading: What Is a Statement of Adjustments in Ontario Real Estate?, What Are Interim Occupancy Fees in Ontario Condos?, and 10-Day Cooling-Off Period for Pre-Construction Condos.
