If a pre-construction condo project is cancelled in Ontario, you are entitled to a full refund of your deposit, including any payments made toward upgrades and extras, plus interest, within 10 days of termination.
Your deposits are required by law to be held in trust, and the Condominium Act requires the developer to return all monies paid by the purchaser within that timeframe.
Purchase agreements for pre-construction condos commonly contain a list of conditions that could lead to cancellation. These may include a failure to sell enough units, an inability to secure financing for the project, or delays in obtaining the required building or planning approvals. The Condominium Information Sheet, which must be attached to every pre-construction condo purchase agreement, outlines these risks. Reviewing that document carefully during your 10-day cooling-off period is essential.
The interest rate payable on returned deposits is generally 2% below the Bank of Canada's bank rate. However, for projects that commenced sales after January 1, 2023, the interest rate is the policy rate instead. Your purchase agreement and the Condominium Home Addendum will specify which rate applies.
If the builder does not return your deposit after the agreement is terminated, Tarion provides deposit protection of up to $20,000.
If your deposit exceeds $20,000, the builder is also required to secure insurance through a major insurer for amounts above that threshold. This means the full deposit should be recoverable, but the process may involve filing a claim.
It is also worth noting that under section 79(2) of the Condominium Act, a developer cannot terminate the agreement simply because it failed to register the condominium declaration and description within a specified timeframe, unless the purchaser consents in writing. This prevents a developer from using its own delays as a reason to cancel and resell units at a higher price.
Even when your deposit is returned in full, a cancellation still carries real costs. You lose the time you spent waiting for the project to complete, and market conditions may have changed significantly. If a cancellation occurs, consulting a real estate lawyer promptly is the best way to confirm your rights and ensure the refund process proceeds correctly.
Related reading: What Is the 10-Day Cooling-Off Period for Pre-Construction Condos in Ontario?, What Is the Difference Between a Deposit and a Down Payment in Ontario Real Estate?, and Where Is Your Deposit Held and How Is It Protected in Ontario Real Estate?.
