Precon 101: Your step-by-step guide to buying a pre-construction property

Thinking about buying a pre-construction property? There are lots of benefits, from being able to customize your unit to having extra time to get a deposit and down payment together. 

Read more: Should I buy precon? 

But buying something that hasn’t been built yet is a lot different than purchasing a resale. There’s a very specific process that takes you from thinking about it to officially owning it. Here’s a quick rundown: 

Step 1: Have your finances in place

Your deposit will be 20-25% of the total purchase price, but you don’t have to have it all ready at the same time – you pay it in installments. The frequency and amount of those deposit installments depend on the developer and how far the project is from completion, but if you buy early, you could have several years to get the entire amount together. 

Step 2: Pick your floor plan

Look through the available floor plans and choose the one you like best, plus 2 more in case your top choice gets snapped up by someone else first. To get access to the best layouts, you need to get in early – as close to the project’s launch date as possible. That requires an agent with VIP access. If you go directly to the developer, you’ll only be able to choose from what’s left after the early-access crowd has had their pick. 

Step 3: Submit a worksheet

This is where you submit your top 3 unit choices along with what building levels you prefer. One thing to remember: there’s no guarantee you’ll get what you’re asking for: a worksheet is just a request for a specific layout. The sooner you submit your worksheet, the higher your chances of getting your preferred unit. 

If your worksheet is accepted, congratulations! The developer will contact your agent – and your agent will help you get ready for what comes next. 

Step 4: Sign the agreement 

The builder will schedule a time for everyone to sit down and sign the Agreement of Purchase and Sale. At this stage, you’ll need to provide post-dated cheques and bring ID including your driver’s license or passport and your social insurance number. 

Step 5: 10-day cooling off period

Use this time to go over all the builder documents with your lawyer and ensure you’ve got the financing you need to move forward (though we recommend getting pre-approved well ahead of the game…)  If you change your mind about the purchase for any reason, you have 10 calendar days to back out of your contract and get your deposit back. 

This cooling-off period only applies to condos, however. If you’re buying a new construction freehold home, it doesn’t apply, though the Ontario government is thinking about changing that (link requires subscription). 

Step 6: Construction 

This is the longest part of the process – it can take years for a condo to break ground and get built. And while builders will provide an expected completion date, condos are hardly ever finished on time. Things often run over by a few months, and sometimes it can take years. Delays happen for all kinds of reasons. 

Step 7: Option to assign (sell) your unit before the building is completed

Every developer has different rules about the when and how of selling before the building is registered. But people do it all the time, whether it’s investors cashing in on appreciation or buyers whose lives have changed. Generally, builders allow assignment sales a few months prior to the occupancy period, but it’s good to know what their rules are before you commit.  

Read more: Assignment sales 101

Step 8: Pre-delivery inspection

A few weeks before your unit is ready for occupancy, the developer will contact you so you can inspect it and see if there are any deficiencies. If there are (a toilet hasn’t been installed right, the flooring isn’t what you selected, the kitchen sink doesn’t work, etc.) this is the time to flag it. 

Step 9: Interim occupancy

When you take possession of your unit before the building has been registered, this is called the occupancy period. You don’t own your unit yet: ownership remains with the developer until registration. During this time, you’ll pay occupancy fees to cover your estimated monthly maintenance fee, property taxes, and interest on the remaining balance of the purchase price. That money works like rent – it doesn’t go toward your mortgage. 

Read more: Interim occupancy explained

Step 10: Building registration

A building can’t be registered until it’s 50-75% occupied, a condo board has been formed, and the city has inspected the building. Once that happens, the building status switches to “registered” and buyers can close their purchases. This is when the tile is transferred over to you and you start paying your mortgage.