5 Things to Check Before Signing a Pre-Construction Agreement in Ontario

Signing a pre-construction Agreement of Purchase and Sale (APS) is one of the largest financial commitments most people ever make. Unlike a resale offer — which is typically 4–6 pages — a pre-construction APS from a major Ontario builder can run 50–100 pages. It contains critical clauses about your deposits, your rights, the builder's rights, closing cost adjustments, and what happens if things go wrong.

You have a 10-day cooling-off period after signing to rescind without penalty. Use every one of those days. Here are the five things every buyer must check — ideally with a real estate lawyer — before that window closes.

1. Development Charge Clauses

Development charges (DCs) are municipal fees that builders pass on to buyers. The critical issue: most APS agreements state that DCs will be charged at the rate in effect at the time of occupancy — not at the rate when you signed. Development charges in Ontario have increased by 30–80% in many municipalities over the past 5 years.

What to look for: does your APS include a development charge cap? A capped DC clause fixes the maximum amount you will pay, regardless of future increases. This is often offered as a VIP/platinum incentive ("capped at $X,000"). If your APS does not cap development charges, you could face an additional $20,000–$100,000+ at closing depending on the municipality and the time elapsed.

Ask your lawyer to identify every variable charge in the schedule of adjustments and your broker to explain which charges were capped as part of your incentive package.

2. Deposit Protection and Trust Provisions

Your deposit must be held in trust by the builder's lawyer or a chartered bank. Confirm this explicitly in the APS — look for the trust clause and the name of the institution holding your funds. Ontario law requires deposit trust protection, but verifying it in your specific agreement gives you certainty.

Also confirm: does your deposit earn interest while in trust? Most Ontario pre-construction agreements specify that deposits are held in trust without interest to the buyer. In some cases — typically high-end or bespoke projects — interest provisions are negotiated. This is a minor point for standard buyers but worth noting for large deposits.

Finally, confirm that the deposit amounts and payment dates in the APS match exactly what you discussed with your broker at the VIP event. Discrepancies between verbal representations and the written APS are the buyer's problem, not the builder's.

3. Permitted Delay Provisions

Builders have the legal right to delay your occupancy date — up to specified limits in Ontario. Standard APS agreements typically allow delays of 120–365 days beyond the original occupancy date without the buyer having termination rights. Beyond the maximum permitted delay, the buyer has the right to rescind and receive their deposit back.

What to look for: exactly how many days of delay are permitted? What constitutes a valid reason for an extension (force majeure, government approvals, weather, labour disputes)? When does your right to rescind arise? Your lawyer should mark these provisions clearly and explain them in plain language before your cooling-off period expires.

Important: delays are common in pre-construction. Most buyers who expect occupancy in "Spring 2028" end up with "Fall 2028." Planning your life around the original date without accounting for extensions creates real disruption.

4. The Permitted Variance Clause

Pre-construction agreements typically include a permitted variance clause that allows the builder to deliver a unit that differs from the floor plan by up to a specified percentage — often 3–5% — without triggering the buyer's right to rescind. On an 800 sq ft condo, a 5% variance means up to 40 sq ft could be missing from the delivered unit without penalty.

Check what percentage variance is permitted, and whether the purchase price adjusts proportionally if the unit is delivered smaller. Some agreements require price adjustment for variances above a threshold; others don't. Your lawyer should flag whether the variance provision is standard for Ontario or particularly aggressive.

5. Finish Specifications and Substitution Rights

Your APS will reference a finishes schedule or specifications sheet that defines what you're getting — flooring type, countertop material, appliance brands, bathroom fixtures. Review this schedule carefully. Then find the substitution clause, which almost certainly gives the builder the right to substitute "materials of equal or greater value" without your consent.

The practical implication: if your APS promises quartz countertops from Brand A, the builder can substitute a different quartz from Brand B and call it equivalent. This is generally fine — builders substitute for supply chain reasons, not to downgrade buyers. But be wary of vague specifications like "laminate or equivalent" where the quality range is enormous.

If there is a specific finish or feature that is genuinely important to you — a particular appliance, a specific tile pattern, a structural feature like a den or powder room — get it confirmed in writing before signing, not verbally at the sales event.