Understanding Presale Deposits in Pre-Construction Real Estate: What Happens at Final Occupancy?

Buying a pre-construction home or condo is exciting — but it also comes with its own financial structure, especially when it comes to your deposit. If you're wondering what happens to your money between signing the agreement and receiving the keys, you're not alone.

Let’s walk through how presale deposits work and what they mean for your purchase.

 What Is a Presale Deposit?

A presale deposit is a series of payments made before your pre-construction home is built. This deposit secures your interest in the unit and is part of your eventual down payment. In Canada, deposits are typically broken down into a schedule that spans the early phases of construction.

Example structure:

• $5,000 on signing

• 5% of purchase price within 30 days

• Additional 5% in 90 or 180 days

• Sometimes a final 5% at occupancy

2. Where Does the Money Go?

Your deposit doesn’t go directly to the builder. It’s held in trust, either by the developer’s lawyer or a licensed brokerage. This is a legal safeguard, ensuring that if the project is cancelled or delayed beyond regulation limits, your money can be refunded (subject to the contract terms).

In Ontario, deposits are protected under the Tarion Warranty Corporation for new homes. In BC, the Real Estate Development Marketing Act (REDMA) offers consumer protections.

3. What Happens at Final Occupancy?

Final occupancy is when the home is ready to live in — but you don’t officially own it yet. Legal title will transfer later, during final closing. During this interim period:

• You may move in.

• You’ll start paying occupancy fees (a combination of interest, estimated taxes, and maintenance fees).

• Your deposit stays held in trust until final closing.

Once final closing occurs, your deposit funds are applied toward your down payment and/or closing costs, reducing the mortgage amount you’ll need.

4. Why It Matters

Understanding this process gives you confidence and clarity as you make one of the biggest purchases of your life. It also ensures you're financially prepared for both the deposit structure and final closing costs.

Have more questions about presales in Ontario or BC? Book a strategy session with me — I’m here to help.

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