New Construction in Toronto: Builder Licences, Warranties, Deposits and HST

A contract first, a home later

With new construction you sign with a company, on its standard agreement, for a unit or house that may not be finished for years. Most of what protects you comes from Ontario statutes and the bodies that administer them, rather than from anything you negotiate at the presentation centre.

Two bodies matter most. The Home Construction Regulatory Authority (HCRA) licenses builders and sellers. Tarion administers the warranty and deposit protection.

Check the builder’s licence before anything else

The HCRA licenses and regulates new home builders and sellers in Ontario. Its Ontario Builder Directory lets you look up a company before you sign and the HCRA website lists recent actions and decisions against licensees, including administrative penalties and notices refusing a licence.

Search both names on the agreement: the builder and the vendor, since they can be different corporations. If either is missing or shows enforcement history, raise it with your lawyer before you pay anything.

The 10 day cooling off period on a condo

A pre-construction condominium purchase comes with a statutory right to cancel. Section 73 of the Condominium Act, 1998 lets you rescind the agreement by written notice, which the builder or its lawyer must receive within 10 days of the latest of:

• the date you receive the disclosure statement
• the date you receive the condominium guide, Ontario’s Residential Condominium Buyers’ Guide
• the date you receive a copy of the agreement signed by you and the builder

Because the clock runs from the latest of those three, it may start after the day you sign.

If you rescind in time, the Act requires the builder to refund promptly, without penalty, all money credited to the price, with interest at the prescribed rate.

This right comes from the Condominium Act, so a freehold new home does not carry it. On a freehold purchase the legal review has to happen before you sign.

Deposits and how far Tarion’s protection goes

Tarion’s deposit protection pays out where a builder goes bankrupt or fundamentally breaches the agreement so the purchase does not close. It also applies where you exercise a legal right to rescind before closing. It does not cover reservation payments made before an agreement is signed.

Home type	Tarion deposit protection
Condo unit	Up to $20,000 plus a limited amount of accrued interest
Freehold home, price $600,000 or less	Up to $60,000
Freehold home, price above $600,000	10 percent of the price, to a maximum of $100,000

The freehold figures apply to agreements signed on or after January 1, 2018. For condos, the Condo Authority of Ontario explains that funds received by the builder generally must be held in trust, which is the first layer of protection, with Tarion’s $20,000 behind it.

Once your condo deposits pass $20,000, ask your lawyer what protects the rest and get the answer in writing.

The Tarion warranty after you move in

The statutory warranty runs from the date of possession (the occupancy date for a condo unit):

Warranty	Examples of what it covers
One year	Defects in work and materials, unauthorized substitutions
Two years	Water penetration, electrical, plumbing and heating
Seven years	Major structural defects

For agreements signed on or after July 1, 2023, maximum statutory coverage is $400,000 for a freehold home and $300,000 for a condominium unit. Earlier agreements carry a $300,000 maximum for both.

Tarion counts the two year coverage from the original date of possession, even if the home is sold. Keep records and file claims within the stated windows.

Tarion’s delayed closing and occupancy coverage has a maximum of $7,500, which includes $150 a day for living costs such as accommodation and meals plus documented costs such as moving or storage.

Interim occupancy on a Toronto condo

Section 80 of the Condominium Act allows a builder’s agreement to permit or require interim occupancy, which the Act defines as occupying a proposed unit before you receive a deed you can register. In practice it means you may live in a new condo before the building is registered as a condominium.

During that stretch the builder can charge a monthly occupancy fee, capped at the total of:

1. interest on the unpaid balance of the price at the prescribed rate
2. an estimate of monthly municipal taxes for the unit
3. the projected monthly common expense contribution

The Condo Authority of Ontario says the fee is payable whether you move in or not. None of it reduces what you owe on the purchase.

HST and the rebates available in 2026

A new home bought from a builder carries HST, which has a federal part and an 8 percent Ontario part. Check the agreement for which rebates the price assumes and what you owe if you do not qualify. Rebate rules changed in 2025 and 2026:

GST/HST new housing rebate. The long standing rebate for a new home you or a relation will live in. The Canada Revenue Agency says the Ontario part can reach $24,000.

Federal first time home buyers’ GST/HST rebate. Covers 100 percent of the GST (or the federal part of the HST) on a qualifying new home up to $1 million, with reduced relief up to $1.5 million. The agreement with the builder must be signed on or after March 20, 2025 and before 2031. Construction must begin before 2031 and be substantially complete before 2036.

Ontario first time home buyers’ rebate. A top up that can recover up to $80,000 of the provincial part of the HST for eligible first time buyers.

Ontario enhanced new housing rebate. A temporary top up open to eligible buyers generally, whether or not they are buying for the first time, when the home will be their or a relation’s primary place of residence. It applies to agreements signed from April 1, 2026 to March 31, 2027, with the home substantially complete by December 31, 2031. Relief is the full 8 percent up to $1 million, a flat $80,000 from $1 million to $1.5 million and a reduced amount up to $1.85 million. Combined provincial rebates cannot exceed $80,000.

Your lawyer should confirm which rebates the agreement assigns to the builder and which you claim yourself.

Land transfer tax is paid at registration

Ontario’s land transfer tax and the City of Toronto’s municipal land transfer tax are both paid when the transfer is registered. On a pre-construction condo that is the final closing, after the condominium is registered, which may be months after you moved in on interim occupancy. On a new freehold home it is normally the closing date itself.

Your lawyer will confirm the value both taxes are calculated on, including the effect of any closing adjustments. First time buyers can claim the Ontario refund of up to $4,000 and the City rebate of up to $4,475 on a newly built home. Our land transfer tax calculator for Toronto and the first time home buyer guide show the figures.

Clauses to raise with your lawyer

1. Closing adjustments. Development charges, utility connections, meters and levies are often passed to the buyer. Ask whether they are capped in the agreement.
2. Critical dates. What the builder must tell you if dates move and what happens if they move repeatedly.
3. Assignment. Whether you may sell the contract before closing and at what fee.
4. Changes. What the builder may alter in the unit, the finishes or the building without your consent.

Take this list to a lawyer who reviews builder agreements regularly.

New or resale in Toronto

Neither is better as a rule. New construction brings a warranty and time to save before closing, along with date risk, occupancy fees and adjustments you cannot fully price on the day you sign.

A resale condo has a known building, a status certificate you can read and a closing date you choose. TRREB’s August 2026 median for a resale condo apartment in the City of Toronto was $550,000, a useful yardstick against a builder’s price for a similar unit. Our Toronto house prices page tracks the figure each month and our guides to the Downtown Waterfront, Yonge and Eglinton, Willowdale and Don Mills describe those areas as they are today.

If you are weighing a builder’s offer against a resale unit, contact us before you sign. We will compare the two with you, including when we think resale is the better fit.