How to Properly Prepare for Your Pre-Construction Purchase Transaction in Ontario

Buying a pre-construction home or condominium is exciting — but the process is very different from a standard resale purchase. It involves multiple stages, long timelines, and financial commitments that unfold over several years. The best way to protect your investment is simple: prepare early, prepare properly, and understand the entire transaction from the moment you sign.

Whether you are a first-time homebuyer or an investor, being proactive can prevent delays, unexpected costs, and even default.

Below is a clear guide on how to prepare for your pre-construction purchase, what to expect during occupancy and final closing, and what challenges often arise.

1. Start Preparing From the Day You Sign the Agreement

Most buyers wait until closing to get organized — this is the biggest mistake.

Proper preparation begins immediately after signing your Agreement of Purchase and Sale (APS).

Key steps to take early:

• Have your lawyer review the APS within the 10-day cooling-off period (for condos).

• Understand your deposit schedule and ensure funds are available on time.

• Clarify whether development charges and levies are capped.

• Understand estimated occupancy dates vs. final closing dates.

• Track all builder notices and amendments.

A strong start can eliminate alot of future problems.

2. Know Your Deposit Structure and Budget for Long-Term Carrying Costs

Pre-construction transactions typically require staged deposits over the first 12–18 months.
Buyers should:

• Set aside deposit funds ahead of time

• Verify daily limits with their bank

• Budget for future stages of the project

• Prepare for possible extended occupancy periods

Many buyers underestimate how long they will pay occupancy fees or how much their final closing costs may be.

3. Prepare Your Financing Early — Even Though Final Closing Is Years Away

Mortgage rules evolve constantly. A buyer who easily qualifies today may struggle years later.

Financing preparation tips:

• Speak to a mortgage broker well before occupancy

• Keep your credit stable during construction

• Avoid major debt increases (car loans, business loans, etc.)

• Maintain proper income documentation

• Understand mortgage rate holds and pre-approval rules

Being proactive prevents the last-minute scramble during final closing.

4. Keep Every Builder Notice and Update in a Dedicated Folder

Over the years leading to completion, the builder will send:

• Addendums

• Notices of delay

• Notices of occupancy

• Unit feature/finish updates

These documents affect your rights and closing obligations. Keeping them organized makes the final closing much smoother.

5. Understand the Two Critical Stages: Occupancy vs. Final Closing

Pre-construction deals involve two closings, not one.

Stage 1: Occupancy Closing (Interim Closing)

This is when you receive your keys and can move in, but you still don’t own the unit yet.

During occupancy:

• You pay occupancy fees (not a mortgage)

• You cannot register a mortgage

• You do not build equity

• The builder still owns the building until registration

Occupancy can last several months or longer depending on construction and registration progress.

Stage 2: Final Closing (Title Transfer)

This is when you officially take ownership.

During final closing:

• Your mortgage is funded

• Title transfers into your name

• You pay final closing costs (LTT, Title Insurance etc.)

• Your occupancy period ends

Preparation here is critical to avoid delays and last-minute surprises.

Work With Your Lawyer Throughout the Entire Process — Not Just At Closing

Pre-construction deals unfold over years, and having your lawyer involved early gives you:

• Better guidance on your specific APS

• Strategies to handle delays or amendments

• Closing cost and adjustment reviews

• Support if you face financial or timing challenges

• Protection in the event of a potential default

Legal support is not just for the end — it’s for the entire lifecycle of the purchase.

Experiencing Closing Stress or Want Full Preparation Guidance? We Can Help.

Whether you are months away from occupancy, approaching final closing, or worried about your ability to close, Capital Law LLP provides clear, practical advice to help you:

• Prepare properly for closing

• Understand your budget and risks

• Review your Agreement of Purchase and Sale

• Navigate occupancy and final closing

• Respond to builder notices

• Assist in challenges or possible defaults

You do not need to navigate this alone.