Quick answer: A pre-construction agreement of purchase and sale (APS) in Ontario is written by the builder's lawyers. Before your cooling-off period ends, check these clauses first:
- Deposits, HST rebate and development charge caps (your money)
- The Tarion Addendum: closing dates and early termination conditions (your timeline)
- Change, assignment and default clauses (your flexibility)
Have a new-construction lawyer review all 12 below.
A builder's APS can run 40 to 80 pages once you count the schedules, the Tarion Addendum and, for condos, the disclosure statement. Most buyers sign it in one sitting at the sales centre. This guide shows you where the risk sits, so you know what to ask before your deposit cheques start clearing.
What is in a pre-construction agreement of purchase and sale?
A new-build APS is very different from a resale offer. It is a standard form drafted by the builder, not by OREA. It usually includes:
- The main agreement (price, deposits, parties)
- Schedules with the builder's extra terms. This is where most of the risk sits.
- A schedule of features and finishes
- The Tarion Addendum and Statement of Critical Dates. These are mandatory and override any conflicting term.
- For condos: the disclosure statement, draft declaration and first-year budget
When should I review the APS, and how long do I have?
Condo buyers get a 10-day cooling-off period under section 73 of the Condominium Act. It starts once you have the signed agreement, the disclosure statement and the Condominium Buyers' Guide. Freehold buyers (detached, semis, freehold towns) get a matching 10-day period for agreements signed on or after January 1, 2027. Until then, ask for a lawyer's review condition before you sign. See our freehold cooling-off guide.
The 12 clauses to check, at a glance
| # | Clause | What to look for | What to ask for |
|---|---|---|---|
| 1 | Price and inclusions | What the price includes. Can the builder substitute finishes? | "Equal or better quality" wording |
| 2 | Deposit schedule | Amounts, due dates, who holds the money in trust | Longer gaps, lower total, trust details in writing |
| 3 | HST and rebate | Is the price "HST included, net of rebates"? What if you don't qualify? | Clear rebate terms and the extra you'd owe |
| 4 | Development charges and levies | Is there a dollar cap, or are increases passed to you? | A firm cap or a full exemption |
| 5 | Closing adjustments | Utility hookups, meters, Tarion enrolment, admin fees | A total cap on adjustments |
| 6 | Critical dates | Tentative, firm and outside dates | Dates that fit your mortgage and lease |
| 7 | Early termination conditions | Builder's outs: sales, financing, permits | Know each deadline |
| 8 | Changes to the unit or project | Rights to change size, layout, materials | Limits on size reduction; notice of changes |
| 9 | Assignment | Is it allowed? Fee? MLS ban? | Right to assign, capped fee |
| 10 | Interim occupancy and leasing | Occupancy fee, rules on renting before final closing | Right to lease during interim occupancy |
| 11 | Financing deadline | When the builder needs proof of a mortgage | A longer deadline, no "default" if lender delays |
| 12 | Default and remedies | What happens if you can't close | Notice and time to fix a default |
"What to ask for" items are common negotiation requests, not guarantees. Builders decide what they'll accept.
1. What does the purchase price actually include?
The price covers the home as described in the schedule of features and finishes. Most builders reserve the right to substitute materials. Look for wording that says substitutes must be of equal or better quality. Check whether parking, a locker or upgrades are in the price or extra.
2. How much is the deposit, and who holds it?
The deposit schedule lists every amount and due date. Missing a payment can put you in default. For condos, deposits must be held in trust or covered by deposit insurance. For freehold homes, Tarion protects deposits up to set limits. Ask in writing who holds your deposit. Full details are in our deposit guide.
3. What does the HST clause say?
Most new-home prices are quoted "HST included, net of rebates." That means the builder assumes you'll qualify for the rebates and assign them to the builder. If you don't qualify (for example, as an investor, or if no buyer lives in the home), you may owe the rebate amount at closing.
For agreements signed from April 1, 2026 to March 31, 2027, the Ontario Enhanced New Housing Rebate can return up to $80,000 of the provincial HST on eligible homes, according to the CRA. Check how your clause handles it. Our HST rebate guide explains who qualifies.
4. Are development charges capped?
Development charges and levies are municipal fees. Many APSs pass increases to the buyer at closing. A cap clause sets the most you'll pay. Without one, your closing bill is open-ended. See development charges explained.
5. What closing adjustments will I pay?
The adjustments schedule lists costs added to the price at closing. Common items include utility connections, water and hydro meters, the Tarion enrolment fee, and builder admin fees. Some APSs list fixed amounts. Others say "to be determined." Ask for a total cap on adjustments. Our closing costs checklist covers each one.
6. What are the critical dates in the Tarion Addendum?
The Statement of Critical Dates sets out when you'll close or move in, and what happens if the builder is late. According to Tarion:
- Freehold: the builder can extend the First Tentative Closing Date twice, by up to 120 days each time, with at least 90 days' written notice. The Outside Closing Date can't be more than 365 days after the Firm (or Second Tentative) Closing Date.
- Condos: the builder sets tentative occupancy dates, then a Firm Occupancy Date with 90 days' notice. Occupancy can't go past the Outside Occupancy Date.
- Compensation: if the builder misses the firm date, you can claim up to $7,500, including $150 per day for living expenses, plus receipted costs like moving and storage.
- Your out: if the home isn't ready by the outside date, you have 30 days to terminate and get all monies back with interest.
Be careful with any amendment that changes these dates "by mutual agreement." It can waive your right to compensation.
7. Can the builder cancel? Check the early termination conditions
The Tarion Addendum lets a builder include early termination conditions. Common ones are not selling enough units, not getting construction financing, or not getting planning or building approvals by a set date. Each condition must be listed with its own deadline. The builder must take commercially reasonable steps to satisfy it.
If the builder terminates under a valid condition, your deposit is returned with interest. The Home Construction Regulatory Authority (HCRA) has warned builders that higher costs alone are not a valid reason to cancel. A builder also can't threaten to cancel if you refuse a price increase.
8. Can the builder change my unit or the project?
Most APSs let the builder change floor plans, room sizes, ceiling heights, materials and the overall project. Look for:
- How much the unit can shrink before you can cancel or get a price reduction
- Whether changes to the building, amenities or parking need notice
- For condos: under the Condominium Act, a material change to the disclosure statement lets you cancel within 10 days of notice. Ask your lawyer whether a change counts as material.
9. Can I assign (sell) my agreement before closing?
Many APSs ban assignments outright or require builder consent and a fee. Some ban listing your assignment on MLS. If there's any chance you'll need to sell before closing, negotiate this now. Read our assignment sales guide.
10. What will I pay during interim occupancy, and can I rent the unit out?
Condo buyers usually move in before the building is registered. During this interim occupancy you pay a monthly fee but don't yet own the unit. The Condo Authority of Ontario says the fee can't be more than the total of:
- Interest on the unpaid balance at the prescribed rate
- Estimated monthly property taxes
- Projected common expense (maintenance) fees
Investors should also check whether you can lease the unit during interim occupancy. Some APSs forbid it.
11. When do I need mortgage approval?
Many builders ask for proof of financing within a set time after signing, often after your cooling-off period ends. If you can't provide it, the builder may treat it as a default. Get your pre-approval before you sign, and check the deadline.
12. What happens if I can't close?
The default clause sets out the builder's remedies. Usually the builder can keep your deposit and sue for further losses, such as a lower resale price. Check whether you get written notice and time to fix a default. If your appraisal comes in low or rates rise, talk to your lawyer early about options like an assignment, extension or mutual release.
APS review checklist
- ☐ Get mortgage pre-approval before signing
- ☐ Book a new-construction lawyer before you sign, so the review fits inside the cooling-off period
- ☐ Confirm in writing who holds your deposit in trust
- ☐ Read the HST clause and what you'd owe if you don't qualify
- ☐ Check for a cap on development charges and levies
- ☐ Ask for a total cap on closing adjustments
- ☐ Put every critical date from the Tarion Addendum in your calendar
- ☐ List each early termination condition and its deadline
- ☐ Check assignment and leasing rights
- ☐ Get every negotiated change in a signed amendment
- ☐ Freehold buyers: register your agreement with Tarion within 45 days
Related reading: The Ultimate Guide to Investing in Pre-Construction in Ontario · Pre-Construction Legal FAQ · How to Buy Pre-Construction in Ontario
Frequently asked questions
Can I negotiate a builder's agreement of purchase and sale?
Often, yes. Builders rarely change the main form, but many will agree to amendments such as capped levies, better deposit terms or assignment rights. This is more common in slower markets. Every change must be in a signed amendment.
What is the Tarion Addendum?
A mandatory part of every new home agreement in Ontario. It sets the rules for closing or occupancy dates, delays, compensation and early termination conditions. If the builder's terms conflict with it, the Addendum wins.
Can a builder raise the price after I sign?
Not unless your agreement allows it. The HCRA has said higher costs alone are not a valid reason to end a contract, and builders can't threaten to cancel if you refuse a price increase. Speak to a lawyer if this happens.
How much delay compensation can I get from Tarion?
Up to $7,500 if the builder misses your firm closing or occupancy date. That includes $150 per day for living expenses with no receipts, plus receipted costs like moving and storage.
Do I need a lawyer to review a pre-construction APS?
It's strongly recommended. Use a lawyer who handles new construction often, and book them before you sign, so the review happens inside your cooling-off period.
Is a pre-construction APS the same as a resale offer?
No. A resale offer usually uses the standard OREA form and can include conditions like financing or inspection. A pre-construction APS is the builder's own contract, with schedules, the Tarion Addendum and, for condos, a disclosure statement.
About the author: Ola Otubu is a REALTOR® with Realty ONE Group Reveal, Real Estate Brokerage, and the founder of Buyprecon.ca. He represents buyers of new construction homes and condos across Ontario, from the first deposit through PDI, closing and warranty claims.
This article is general information, not legal or tax advice. Every agreement is different and rules change. Have a real estate lawyer review your agreement before your cooling-off period ends. Sources: Tarion (freehold closing dates and condo occupancy dates); Condo Authority of Ontario; Condominium Act, 1998; Home Construction Regulatory Authority (HCRA); Canada Revenue Agency (Ontario Enhanced New Housing Rebate). Last updated October 19, 2026.
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