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“PURCHASE AGREEMENT” Essential Insights Before Purchasing a Pre-Construction Condominium

Condominiums remain a highly attractive option for new home buyers. The process of purchasing a pre-construction condominium differs slightly from that of buying a newly built home. To help you make a well-informed decision, here are some key points to consider:

Understanding the Purchase Agreement

Your purchase agreement is a critical document that outlines your rights, your builder’s rights, details about your unit, and specifics of the project. To ensure that you fully understand the terms and are adequately protected, it is highly recommended to have your agreement reviewed by a lawyer experienced in pre-construction condominium transactions.

10-Day Cooling-Off Period

Under the Condominium Act, 1988, you have a 10-day cooling-off period during which you can cancel your purchase agreement without penalty. This period allows you to reconsider your decision and seek legal advice. If you decide to withdraw from the purchase, you can terminate the agreement within these 10 days and receive a full refund of your deposit.

Key Information Sheet

For projects or phases that went to market after January 1, 2020, all agreements of purchase and sale must include an information sheet at the beginning of the purchase agreement. This sheet highlights key potential risks associated with buying a pre-construction condominium. It provides transparency and helps buyers understand the conditions that could affect the project’s completion.

Potential Early Termination Conditions

The information sheet also outlines potential early termination conditions. These conditions can include reaching a minimum sales threshold for the project to proceed, the developer securing necessary financing for the construction and completion of the project, and obtaining required approvals from the municipality. Understanding these conditions is essential as they can impact the project’s progress and your investment.

Legal Review of the Purchase Agreement

Having a lawyer review your purchase agreement is crucial. A lawyer with expertise in pre-construction condominium transactions can identify any unusual clauses or potential issues that may not be immediately apparent to you. They can also explain your rights and obligations under the agreement, ensuring you are fully informed before making a commitment.

Rights and Responsibilities

Your purchase agreement will detail the rights and responsibilities of both parties. This includes timelines for construction, potential delays, what happens if the project is canceled, and what you are entitled to in terms of compensation or refunds. Being aware of these details helps you understand what to expect throughout the construction process and what actions you can take if issues arise.

Deposits and Financial Considerations

The agreement will also cover financial aspects such as deposit structure, payment schedules, and any additional costs you may incur. Understanding these financial commitments is vital for planning your budget and ensuring you can meet all required payments.

Impact of Municipal Approvals

Obtaining the necessary approvals from the municipality is a significant step in the development process. Your agreement should outline what happens if these approvals are delayed or denied. This can affect the project timeline and, in some cases, lead to the project’s termination.

Importance of Sales Thresholds

Many pre-construction projects require a minimum number of units to be sold before construction can commence. This sales threshold ensures the developer has sufficient funds to proceed. If the sales target is not met, the project may be canceled, and your deposit will be refunded. Understanding this condition helps you gauge the project’s viability.

Securing Construction Financing

Securing financing for the construction and completion of the project is another critical condition outlined in the purchase agreement. This financing is necessary for the project to move forward. If the developer fails to secure the required funds, the project may be delayed or canceled. Knowing this helps you assess the financial stability of the project.


Buying a pre-construction condominium involves various considerations and potential risks. Thoroughly understanding your purchase agreement, taking advantage of the 10-day cooling-off period, and having a lawyer review the agreement are essential steps to protect your investment. By being aware of the key elements and potential conditions outlined in the purchase agreement, you can make a confident and informed decision.


1. What is the 10-day cooling-off period? The 10-day cooling-off period is a time frame during which you can cancel your purchase agreement without penalty and receive a full refund of your deposit.

2. Why is it important to have a lawyer review my purchase agreement? A lawyer experienced in pre-construction condominium transactions can identify potential issues, explain your rights and obligations, and ensure you fully understand the terms of the agreement.

3. What are early termination conditions? Early termination conditions are specific criteria outlined in the purchase agreement that, if not met, can lead to the project’s cancellation. These include sales thresholds, financing, and municipal approvals.

4. What should I know about the deposit structure? The deposit structure details the payment schedule and amounts required throughout the construction process. Understanding this helps you plan your finances and meet all payment obligations.

5. How do municipal approvals affect the project? Municipal approvals are necessary for the project to proceed. Delays or denials in obtaining these approvals can impact the project timeline and, in some cases, result in the project’s termination.