Pre‑Construction Condo Closing: Legal Considerations

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Buying a pre-construction condothe in Ontario is a unique experience—filled with potential, but layered in complexity. Unlike a traditional resale purchase, a pre-construction deal often spans years and involves multiple closings, evolving contracts, and risks that aren’t always obvious on the surface.

A real estate lawyer doesn’t just “close the deal.” They interpret and explain builder-friendly clauses, calculate hidden costs, negotiate protections, guide you through interim occupancy, and finalize your legal ownership when the condo is eventually registered. They also ensure your mortgage is correctly processed, your title is clean, and your rights are fully protected at every stage.

In this post, we’ll walk through the pre-construction condo closing process in Ontario—from the initial contract to the final title transfer—and explain exactly what your lawyer does (and why it matters) at each critical step.

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Reviewing the Agreement of Purchase & Sale (APS)

Once you’ve selected your unit and signed the builder’s Agreement of Purchase and Sale (APS), you enter a 10-day cooling-off period. This brief window is the most important legal opportunity in the entire process—and it’s when you should speak to a lawyer.

Deposit Structure & Cooling-Off Period

Most builders structure deposits in staggered payments: an initial $5,000 upon signing, followed by a series of scheduled top-ups over the next few months. These deposits are held in trust—usually by the builder’s lawyer—and protected under Ontario’s Tarion Warranty Program. But even though they’re refundable during the cooling-off period, they become locked in afterward. That’s why early legal review is so critical.

During the 10-day cooling-off period, your lawyer will review the APS in its entirety and advise you on potential risks and obligations. If something in the contract doesn’t align with your expectations or poses a legal concern, this is your chance to walk away without penalty.

Highlighting Risky Clauses

Pre-construction APS agreements are heavily weighted in the builder’s favour. Many buyers are surprised to learn the builder can:

• Make changes to unit layout or square footage
• Swap out finishes and materials
• Delay occupancy multiple times
• Assign parking or lockers at their discretion
• Cap or exclude certain cost adjustments

Your lawyer will comb through the fine print to identify any clauses that could cause issues down the line. They’ll flag unreasonable adjustment caps, unclear assignment rules, or vague closing date provisions. In some cases, they may recommend walking away entirely—especially if the contract lacks basic consumer protections.

Negotiating Terms with the Builder

While you can’t completely rewrite the APS, your lawyer can often negotiate better terms—especially if flagged early in the cooling-off window. This may include:

• Capping development charges
• Clarifying occupancy timelines
• Securing more favorable assignment rights for a potential assignment sale
• Ensuring HST rebate eligibility is clearly stated

Having a lawyer intervene at this stage isn’t just helpful—it’s strategic. It lays the foundation for a smoother closing years down the road and protects you from expensive surprises that might otherwise be buried in the fine print.

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Interim Occupancy Closing

In a resale condo transactionx, ownership and possession happen at the same time. But with a pre-construction condo, there’s a unique middle step called “interim occupancy.” It’s when you get the keys—but not the deed.

During this phase, your lawyer’s role is to ensure that you’re legally protected, financially informed, and not caught off guard by the builder’s demands.

What Is Interim Occupancy?

Interim occupancy occurs once the builder deems your unit fit for possession, but before the entire building is registered as a condominium with the Land Registry Office. Until registration is complete, you can live in the unit (or rent it out), but you don’t legally own it yet.

This period can last anywhere from a few months to over a year, depending on how quickly the builder finalizes the rest of the development and completes the condo corporation registration. While it feels like closing, it’s not final.

The Occupancy Fee (What Makes It Up)

During interim occupancy, you’re required to pay a monthly occupancy fee to the builder. This fee is made up of three components:

1. Interest on the unpaid purchase price (calculated using the builder’s interest rate)
2. Estimated property taxes
3. Projected common element or condo fees

Importantly, this is not rent. It doesn’t go toward your mortgage or equity, and it isn’t credited against the final purchase price. It’s simply a fee for the right to occupy the unit before legal title is transferred.

Your lawyer will review the builder’s statement of Interim Occupancy Fees, explain the breakdown, and ensure there are no overcharges or miscalculations.

Legal Responsibilities During Interim Occupancy

Even though you don’t yet own the unit, you still bear many of the responsibilities of an owner during interim occupancy. These include:

• Maintaining the condition of the unit
• Complying with condo rules and by-laws
• Carrying appropriate insurance
• Paying the monthly occupancy fees on time

Your lawyer will ensure you understand your legal status and obligations during this in-between phase. They’ll also monitor the builder’s progress toward registration and advise you if delays go beyond what’s reasonable.

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Final Closing and Title Transfer

Final closing is when ownership officially changes hands. Your name goes on title, your mortgage is registered, and the builder gets paid. It’s the day that legally marks the end of the transaction—but for your lawyer, it’s where some of the most critical legal work happens.

Notice of Final Registration

Once the condominium is formally registered with the Land Registry Office, the builder will issue a Notice of Final Closing Date. This is your official heads-up that legal title will soon be transferred to your name.

Your lawyer will receive this notice as well. From here, they begin preparing all the necessary closing documents, reviewing the final financial breakdowns, and coordinating with your lender if there’s a mortgage involved. Timeframes are often tight—typically 10 to 15 days from notice to closing—so immediate action is key.

The Lawyer’s Role

Behind the scenes, your lawyer handles a checklist of legal and financial steps to protect your interests and complete the deal:

• Title Search: Your lawyer confirms that the condo unit is free and clear of liens or legal issues. Any problems are flagged and addressed before closing.
• Title Insurance: If required by your lender (and often advisable regardless), your lawyer secures title insurance to guard against defects or fraud.
• Mortgage Coordination: Your lawyer receives mortgage instructions directly from your lender, prepares the Charge/Mortgage, and ensures it’s registered correctly.
• Teraview Registration: On closing day, your lawyer uses Ontario’s Teraview system to register both the Transfer (Deed) and Charge (Mortgage) to your name.

This step legally vests ownership in you and secures the lender’s interest. Only once registration is complete are the builder’s funds released.

Closing Costs and Financial Adjustments

Pre-construction closings come with a complex list of financial obligations. Your lawyer will review and explain each line item, identify anything excessive or unusual, and ensure the final Statement of Adjustments is accurate.

Here’s what to expect:

• Legal Fees & Disbursements: Your lawyer’s legal fee for handling a pre-construction purchase usually ranges from $1,200–$2,500, depending on complexity. Disbursements include registration costs, title search fees, software levies, and trust accounting expenses.
• Ontario Land Transfer Tax: The provincial portion of land transfer tax is calculated on a graduated scale based on price. Your lawyer ensures the proper amount is paid and applies any first-time buyer rebates.
• Municipal Land Transfer Tax: For Toronto buyers, this means paying both the municipal and Ontario land transfer taxes—doubling the impact. This includes the Toronto Land Transfer Tax, a substantial component for urban condo closings.
• Development Charges & Tarion Fees: These are builder-imposed costs for infrastructure, education levies, and Tarion Warranty enrollment. Your lawyer confirms whether these were capped or excluded in your APS.
• HST Rebate: If you’re eligible for the HST New Housing Rebate, your lawyer ensures it’s properly applied at closing. If you don’t qualify (for example, if the unit is for investment), they’ll advise on how and when to apply directly to CRA.
• Statement of Adjustments: This document summarizes all credits and debits between buyer and builder—including occupancy fees, prepaid expenses, Reserve Fund contributions, and prorated property taxes. Your down payment will need to cover this amount minus your mortgage funds. Your lawyer reviews it in full to protect against inflated or duplicated charges.

Once everything checks out, your lawyer completes the registration and final disbursement of funds. At that point, you officially become the legal owner, and your final closing costs are fully settled.

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Summary

Closing on a pre-construction condo in Ontario isn’t just a matter of signing a few documents. It’s a multi-phase legal process that stretches from the initial Agreement of Purchase and Sale all the way to final title registration—and your lawyer is involved at every step.

They begin by reviewing the APS during the cooling-off period, flagging hidden risks, and negotiating better terms. During interim occupancy, they ensure you understand your financial obligations and monitor builder compliance. And at final closing, they manage everything from title registration to mortgage coordination, disbursements, and closing cost reviews.

Each stage carries its own legal nuance, timelines, and potential pitfalls. A lawyer’s role isn’t just to close the deal—it’s to protect your investment, enforce your rights, and ensure you’re not left with surprises on closing day or beyond.

Whether you’re a first-time buyer or a seasoned investor, working with an experienced real estate lawyer is the smartest step you can take in a pre-construction condo purchase.

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If you have questions about pre-construction condo closings or any other real estate legal matter, we’re here to help. As real estate law specialists, our mission is to provide the clarity and direction you need to protect your property rights. This includes in-person or virtual closings.

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