You hear about hot pre-construction launches, but the deposit schedules and legal terms can feel like alphabet soup. If you are looking at projects in Richmond Hill, Vaughan, or Markham, you want to know exactly how much you will pay, when you will pay it, and how your money is protected. This guide breaks down the typical structures, where deposits are held, the key risks, and what to confirm before you sign an Agreement of Purchase and Sale. Let’s dive in.
Deposit basics in Ontario
Pre-construction deposits are staged payments toward your purchase price. They show commitment and give the developer working capital to move the project forward. The total and timing vary by builder, product type, and market conditions.
There is no single, province-wide deposit schedule. Each builder publishes a specific schedule in the APS or pre-launch materials. Always treat marketing examples as illustrative and rely on the APS for the final word.
Typical deposit schedules
For many condominium projects in the Greater Toronto Area and York Region, total deposits commonly land in the range of 15% to 20% of the purchase price before closing. Low-rise homes such as townhouses and semis can be similar or higher, often 20% to 25%. Some projects ask for more or less based on the builder and market conditions.
Common staging patterns you might see include:
- 5% on signing, then 5% at 30 days, 5% at 120 days, and 5% at 365 days.
- 5% on signing with additional 5% installments at 30, 90, and 180 days.
- 5% on signing, 5% at 30 days, then a final 10% at a later milestone specified in the APS.
Many sales programs start with a small reservation deposit, often in the range of $5,000 to $10,000, to hold a unit before the APS is signed. That reservation amount is usually credited toward the first deposit stage once you execute the APS. Confirm whether the reservation is refundable and under what conditions.
Timelines can vary:
- Near-complete projects may ask for larger amounts upfront with shorter schedules.
- In slower markets, some builders offer extended schedules.
- Large or institutional purchasers may negotiate alternatives like a letter of credit. This must be clearly documented in the APS.
Remember that your deposit schedule only covers pre-closing payments. You still owe the closing balance at final closing or at occupancy as set out in the APS.
Who holds your money
The APS should state who receives and holds your deposits. Common arrangements include:
- Vendor’s lawyer trust account. This is the most typical structure. A licensed Ontario law firm holds your deposit in trust until closing or until the APS says otherwise. Lawyer trust accounts are subject to strict handling and accounting rules.
- Brokerage trust account. In some cases, your brokerage takes an initial deposit into its trust account, then transfers it as the APS directs.
- Builder-controlled accounts. Some builders hold deposit funds directly under the contract. This can increase creditor risk if the builder becomes insolvent. Confirm who the trust holder is and how funds are safeguarded in the APS.
Key items to verify in the APS:
- The full legal name of the trust holder and law firm, if applicable.
- Whether your deposit is placed in a separate trust account.
- Whether deposits earn interest and who receives it.
- Refund conditions and any penalties.
Protections and disclosures you should know
There are several layers of rules and disclosures that affect deposits and buyer rights:
- Ontario lawyer trust rules. When funds are held by a licensed lawyer, they must be held in trust under established rules. This provides procedural safeguards for your money.
- New-home warranties. Tarion administers new-home warranty coverage once a project is properly enrolled. Warranty protections relate to construction and performance obligations. They do not automatically guarantee replacement of deposits in every scenario.
- Condominium disclosure. For condo purchases, developers must provide specific disclosures required under provincial law. These documents govern how deposits are handled, your rights to cancel in certain cases, and what happens if projects are delayed or canceled. Always review them with your lawyer.
The safest practice is to confirm the deposit pathway in writing and ensure funds are held in a proper trust account as your APS and disclosure documents describe.
Risks and common scenarios
Understanding how deposits are treated in different situations helps you plan and avoid surprises.
Developer insolvency or bankruptcy
- Deposits held in a vendor lawyer’s trust account generally benefit from trust protections, although complex outcomes can still arise.
- Deposits paid directly to a builder’s operating account carry higher creditor risk. In an insolvency, buyers may be treated as unsecured creditors and recovery can be slow or limited.
Construction delays and occupancy changes
- Delays do not typically change deposit handling. Your funds remain credited toward the purchase price.
- Review APS delay clauses, outside occupancy or closing dates, and any interest or termination rights if timelines are missed.
Cancellation by purchaser
- Refund rights are governed by the APS and, for condos, by statutory disclosures. Some deposits are refundable in limited conditions, such as specific cooling-off or conditional periods. Others may be partially refundable or forfeited.
- Know your deadlines for any financing or other conditions that allow you to cancel without penalty.
Assignment before completion
- Many buyers plan to assign the APS before closing. The APS may allow this, restrict it, or require a fee and the developer’s consent.
- Ensure deposit transfer instructions are clear in the assignment agreement. The original deposit typically follows the contract and must be documented.
Interest on deposit funds
- Some trust accounts pay interest. The APS usually states whether interest belongs to the purchaser, the vendor, or is otherwise allocated. Do not assume you will receive interest unless the APS says so.
York Region realities
York Region is a high-growth corridor with frequent launches across Richmond Hill, Vaughan, and Markham. Competitive releases can push faster sales phases and create varied deposit schedules from one project to the next.
You will see a mix of large, established public builders and mid-size local firms. Bigger balance sheets may come with stricter deposit totals but clearer process controls. Smaller or newer builders may offer flexible schedules, but you should weigh that against counterparty risk and request clear deposit protections in the APS.
Assignment activity occurs in some York Region launches. If you are targeting assignment as a strategy, scrutinize assignment clauses, fees, and tax implications. Also plan for lender requirements at occupancy. Early deposits do not replace the lender’s down payment criteria at mortgage approval.
Pre-signing checklist
Use this checklist to streamline your review before you commit:
- Exact deposit schedule and total percentage before closing.
- Who holds the deposit, including the vendor lawyer’s name and firm.
- Whether there is a reservation deposit and if it is refundable.
- Conditions for refund and your cancellation timelines.
- Project enrollment details for new-home warranties, where applicable.
- Assignment rights, fees, and required consents.
- Delay, occupancy, and interim occupancy fee provisions.
- Whether deposits earn interest and who receives it.
- Any acceptable alternatives to cash deposits for larger purchases, such as a letter of credit.
- Developer track record and solvency indicators.
- HST and tax treatment on deposits and the balance. Confirm with your lawyer or accountant.
- Any incentives that may change the schedule or refundability.
A simple example timeline
Here is an illustrative condo deposit schedule you might encounter. Always confirm the actual schedule in your APS.
- Reservation: $5,000 to $10,000 to hold a unit, credited on signing if you proceed.
- On signing: 5% of the purchase price.
- At 30 days: 5%.
- At 120 to 180 days: 5%.
- At 365 days or a specified milestone: 5%.
- On occupancy or closing: balance due per the APS and your lender’s requirements.
This pattern would total about 15% to 20% before closing for many condo projects. Low-rise projects may require 20% to 25% before closing, with similar stage-based timing.
How we help you compare projects
You should feel confident that your deposit funds are structured and protected in line with your goals. Our advisory approach centers on clarity, not pressure. We help you compare schedules across York Region launches, flag trust and disclosure terms to review with your lawyer, and align deposit timing with your cash flow and financing plan. If assignment is part of your strategy, we walk you through the contractual rules and typical fees so you can quantify your exit options.
If you are exploring pre-construction opportunities in Richmond Hill, Vaughan, or Markham, connect with us for a private, data-informed conversation. Speak with the team at Leaf and Palm Realty Corp. to map your next steps.
FAQs
How much do I pay upfront for a York Region condo?
- Many condo projects ask for staged deposits totaling about 15% to 20% before closing, often starting with 5% on signing and further 5% installments at set intervals.
Where is my deposit held and is it safe?
- Deposits are commonly held in the vendor lawyer’s trust account, which is subject to strict rules. If funds go directly to a builder’s account, creditor risk is higher.
Can I get my deposit back if the project is delayed?
- Delays alone usually do not trigger refunds. Your APS governs any rights to interest, extensions, or termination related to delay.
What happens to my deposit if I assign my contract?
- If assignment is allowed, the APS and assignment agreement should specify how the original deposit is transferred to the assignee. Developer consent and fees may apply.
Do deposits earn interest for the buyer?
- Only if the APS says so. Some trust accounts accrue interest, but contracts often allocate it to the vendor or set different terms.
Are low-rise projects different from condos?
- Low-rise deposit totals are often similar or higher than condos, frequently 20% to 25% before closing, with timing and stages defined in the APS.
