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What is a Preconstruction purchase?

In Ontario, a preconstruction purchase can refer to either the purchasing of condominiums or freeholds (detached, townhouses, semi-detached homes) to be built and occupied at a future date. Sometimes these developments will not be ready for many years. The most common reference relates to high-rise condominium units.

The buyer enters into an agreement of purchase and sale based upon a developer's quoted price today and such buyer gives a deposit with further deposits stretched over a period of time. Usually these staggered deposits total twenty (20%) of the purchase price. In today's market, a buyer may be able to negotiate regarding the total deposits or the length of time respecting further deposits.



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world class preconstruction architecture

We add the newest Toronto preconstruction projects here. With the recent announcements of new preconstruction highrise condominium projects in the City of Toronto, the City will have some of the most innovative architectural developments in the world.

The above represents ultra-luxury preconstruction condominium developments in the City of Toronto. However, KK Realty Group can also assist you in the purchase of mid-priced and lower-priced preconstruction projects both in Toronto and in the Golden Horseshoe area.


One of the most important factors to consider is the history, reliability and reputation of the developer. A developer has to forecast their costs, such as labour, materials and interest expenses. If the developer underestimates these and sells a unit at today's quoted price, they may not be able to build the project. In which case, your deposit(s) will be returned. But this is not the outcome that a buyer wants. The buyer anticipates that with capital appreciation of real estate, their unit which was purchased today will be worth more in the future.

The delay in purchasing until occupancy also allows a buyer, who intends to occupy the unit for their own use, to save more money over the years until occupancy is ready.

On the other hand, if you are an investor, you might resell the unit or add to the rental supply by leasing the unit.

The purchase of a preconstruction unit is a method for buyers (both domestic and foreign) to purchase a unit with staged deposits for a unit that will be ready in the future. Pursuant to Ontario consumer protection legislation, there is a 10-day cooling off period that allows buyers to have the agreement reviewed by a legal advisor. If you are not satisfied, you may cancel your contract within this period and get your deposit returned. This cooling off period only applies to new developments and not to resales.


Factors that may affect your decision

Before deciding to purchase a preconstruction unit, you should consider:

  • Location, quality and safety of a neighbourhood
  • Budget
  • Proximity to your employment
  • Transportation - transit and highway access
  • Education - schools (public or private) and universities
  • Parks and outdoor spaces
  • Amenities of the building
  • Occupancy date
  • Investment opportunity

Factors that may affect a preconstruction contract

It is highly recommended that you retain a legal advisor familiar with condominium law and discuss the following:

  • Experience and reputation of the developer (Tarion has a registry regarding projects cancelled by certain developers)
  • Price per square foot
  • Deposit structure
  • Capping of development fees, charges and levies
  • Right to assign the agreement of purchase and sale
  • What is interim occupancy vs. registration and final closing
  • Interim occupancy costs
  • Right to lease the unit during interim occupancy
  • Costs, expenses and taxes involved with final closing i.e. land transfer taxes, Tarion Warranty, etc.
  • Maintenance fees for the unit and if parking and/or lockers are included
  • If parking and/or lockers are not included, what are the purchase costs and fees for these?

We can recommend several legal advisors that specialize in this area. But the ultimate decision regarding which lawyer to use is your decision.

Foreign Buyers of Preconstruction

Foreign Buyers of Preconstruction

With respect to foreign buyers, there is legislation, both Federal and Provincial, that may apply to you. Provincially, as of October 25, 2022, the Non-Resident Speculation Tax (NRST) imposed an additional 25% tax (up from 20%) for non-residents (individuals, foreign corporations or entities) on the purchase price of real estate in Ontario. This tax is in addition to other costs and expenses such as land transfer taxes.

Federally, commencing on January 1, 2023, the government intends to ban foreign investors from purchasing real estate for a 2-year period in a bid to cool speculation.

For more information regarding the Federal and the Ontario legislation, contact your legal advisor and/or accountant.


We Specialize In the Following Areas

  • Downtown and Central Toronto
  • North York
  • Etobicoke
  • Scarborough
  • Mississauga
  • Oakville/ Port Credit
  • Thornhill
  • Richmond Hill
  • Vaughan
  • Pickering
  • Whitby
  • Ajax
  • Oshawa
  • Hamilton

We may also specialize in areas not mentioned above. In areas where we do not specialize, such as Ottawa, Montreal, etc., we can refer you to agents who are part of our network.

Please contact a member of the team: KK Azimis at (647) 949-4111

Work With Us

The KK Realty Group prides itself on informing and educating our clients in order to make better real estate decisions. It is our pleasure to assist families in buying or selling a home. We welcome the opportunity to be part of making a difference in your family’s future and are committed to offering our clients the very best service in today’s competitive environment. Please view our Buyers’ Information and Sellers’ Information guides on this website.

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