Is Your Pre-Construction Deposit Safe? Deposit Structure & Tarion Protection (2026)
Condos held in trust, freeholds tiered — plus the new April 2026 “45-day notice” rule
If the builder fails, can I get my pre-construction deposit back?
Largely, yes — there’s protection. For a condo: according to Tarion, the builder must place all buyer deposits in trust under the Condominium Act; if a deposit wasn’t placed in trust or the builder doesn’t return it, Tarion provides deposit protection of up to $20,000. For a freehold home: Tarion deposit protection is up to $60,000 for a price of $600,000 or less; over $600,000 it’s 10% of the price, capped at $100,000.
Sources: Tarion (tarion.com, Deposit Protection Q&A); Ontario Condominium Act, 1998. New rule: Tarion freehold deposit-notice requirement effective April 1, 2026.
The unnerving part of pre-construction is that you pay tens of thousands up front and receive the home years later — so who holds that money, and is it safe? The answer is better than many expect, but condos and freeholds are protected in completely different ways, and Tarion just changed the freehold rules in April 2026. Here is how the deposit is staged, how much is protected, and the new notice requirement that’s easy to miss.
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Pre-con deposits are staged, not paid all at once
ℹ️Cumulative deposit percentages and installment timing vary by builder and project — there’s no universal standard. Rely on your own contract’s deposit-structure clause; don’t apply another project’s numbers to yours.
Condos: the Condominium Act requires full trust
Freehold homes: Tarion’s tiered protection
🚨From April 1, 2026, missing the 45-day Tarion notice on a freehold precon can drop your deposit protection from the full amount to a share of an annually-capped fund. Handle that notice the day you sign — don’t put it off.
New for April 2026: freehold buyers must notify Tarion within 45 days
💡 Remember the split: condos rely on the Condominium Act’s full trust plus Tarion’s $20,000 backstop; freeholds rely on Tarion’s tiered protection ($60K/$100K), and from April 2026 you must notify Tarion within 45 days to get the maximum. If you’re buying a freehold precon, put that notice deadline on your checklist.
What to confirm before signing a precon contract
First, read the deposit structure (amounts + schedule) and make sure your cash flow can keep up. Second, confirm whether and how your deposit is protected — for a condo, ask that all deposits go into trust; for a freehold, lock in the April-2026 45-day notice. Third, have a lawyer who knows pre-construction review your contract (precon contracts come with a statutory cooling-off period during which you can rescind). Deposit safety is one piece of precon due diligence, but it’s directly about the first dollars you hand over.
Pre-Construction Buying Guide →Ontario Home Buying Guide →GTA Market Data (Monthly) →
Frequently Asked Questions
Is my pre-construction condo deposit protected?
Yes. According to Tarion, the builder must place all deposits in trust under the Condominium Act; if a deposit isn’t in trust or isn’t returned, Tarion provides protection of up to $20,000.
How much Tarion deposit protection do freehold pre-construction homes get?
According to Tarion, up to $60,000 for a price of $600,000 or less; over $600,000 it’s 10% of the price, capped at $100,000.
What is Tarion’s new 2026 freehold deposit rule?
From April 1, 2026, new freehold buyers must notify Tarion within 45 days of signing. Those who do qualify for maximum deposit protection; late or non-registrants are covered only by a separate fund capped at $15 million annually.
Is the pre-construction deposit paid all at once?
Usually no. It’s paid in installments per the contract’s deposit structure (often a cumulative ~15%–20% for condos, varying by project) and credits the purchase in full at closing.
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