Can't Close on a Pre-Construction Condo? An Ontario Investor's Options
Can't close on a pre-construction condo in Ontario? What a low appraisal means, if the builder can sue you, and the options investors have before closing day.
Gary McGowanREALTOR® and international real estate trainer
If you can't close on a pre-construction condo in Ontario, you don't just lose your deposit. The builder can resell the unit and sue you for the difference, plus their costs. Nobody says that part at the sales centre.
The good news: you have options, if you start well before closing day.
I got a great question on Instagram this week, and a lot of you have asked a version of it: if the bank won't lend the full price, or the builder walks away, where does the buyer's money go? Let's answer both.
What happens if you can't close on a pre-construction condo?
Your lender lends on today's value, not the price you signed for years ago. When those two numbers drift apart, you cover the gap in cash.
They have drifted. TRREB reported the average GTA condo apartment sold for $621,400 in October 2026, down 5.8% from a year earlier. Many units now closing were bought near the peak, and I covered what September's condo numbers meant for buyers and sellers. The result: an appraisal can land well below the contract price.
I've been investing in real estate since 2008, and this is the risk I'd stress-test first on any presale: what if it appraises 15% lower and rents don't cover the carrying costs? If you want the bigger picture on what's sitting unsold, I broke down the Toronto condo glut and what it means for investors.
Can a builder sue you for not closing?
Yes. And Ontario courts have backed them.
In one case, buyers agreed to pay $937,400 for a new home in Exeter, then didn't close. The builder resold it for $705,000. The Court of Appeal for Ontario upheld a judgment of $142,757.89 against the buyers, on top of the deposits they'd already paid.
Walking away is the most expensive choice on the list.
Your options before closing day
Talk to a real estate lawyer and a mortgage broker 90 days out, not 9. Then work through these:
- Bring more cash. Equity from another property or family help can bridge the gap.
- Shop lenders. A mortgage broker can get a second appraisal or try a different lender.
- A private second mortgage. It costs more, but it can be cheaper than losing everything.
- An assignment sale. Sell your contract before closing, if the builder allows it. Read your assignment clause now.
- Ask for an extension or a mutual release. Some builders would rather negotiate than litigate. Get it in writing.
Is my pre-construction deposit protected?
If the builder is the one who can't finish, your deposit has protection.
Ontario requires developers to hold condo deposits in trust, and you have 10 days to cancel a new condo purchase after signing. If the deposit wasn't held in trust, or the builder doesn't return it, Tarion provides deposit protection of up to $20,000 for condos.
Ask three questions before you sign: Is my deposit in trust? Who holds it? What happens if the project stalls?
Frequently asked questions
What happens if my pre-construction condo appraises lower than the purchase price?
Your lender will only lend against the appraised value, so you must cover the difference in cash at closing. You can ask for a second appraisal, try another lender, add equity or use a private second mortgage. Start at least three months before closing.
Can I walk away from a pre-construction condo in Ontario?
You can, but it's costly. The builder can keep your deposit, resell the unit and sue you for any shortfall plus carrying costs. Ontario courts have upheld these claims. An assignment sale, an extension or a negotiated mutual release are usually far better outcomes.
Do I get my deposit back if the builder cancels?
If the builder terminates the agreement, deposits held in trust are protected and must be returned. If the deposit wasn't held in trust or isn't returned, Tarion's condo deposit protection covers up to $20,000. Deposits paid to reserve a unit before signing aren't covered.
Closing soon and the numbers don't add up? Book a call with me and we'll walk through your options together, before the deadline makes the choice for you. You can also check this month's GTA market report to see where condo values sit right now.
