Understanding Pre-Construction Agreements (Freehold vs. Condominium)

By: Amanda Willing

Summary:

When purchasing a pre-construction property, it’s important to understand that not all new builds are treated the same under Ontario law. The type of property you are purchasing—a condominium vs. a freehold home—has significant legal implications, particularly when it comes to your right to reconsider the agreement.

When you buy pre-construction, you are not purchasing a completed home—you are entering into a long-term contract with a builder. These agreements are detailed, complex, and typically drafted to protect the developer’s interests. Unlike resale transactions, there are additional uncertainties, including construction timelines, final costs, and even the finished product itself.

Cooling-Off Period: Condo vs. Freehold

One of the most important distinctions is the cooling-off period:

• Pre-Construction Condominiums In Ontario, buyers of new condominium units are legally entitled to a 10-day cooling-off period. This period begins after you receive the fully executed agreement and disclosure documents. During this time, you can:

  • Have the agreement reviewed by a lawyer

  • Reconsider your purchase

  • Cancel the agreement for any reason without penalty

    
    

• Pre-Construction Freehold Homes (e.g., detached, semi-detached, townhomes not part of a condominium) Buyers of pre-construction freehold homes are not automatically entitled to a 10-day cooling-off period under Ontario law.

  
  

  • Once the agreement is signed, you are generally firmly bound, unless the agreement itself includes a specific rescission clause (which is not guaranteed).

  • This makes pre-signing legal review even more critical, as you may not have an opportunity to withdraw without consequences.

    
    

Why This Difference Matters

Many buyers assume all new builds come with a cooling-off period—but this is only guaranteed for condominiums.

For freehold purchases:

• You may be committing immediately upon signing

• There may be no opportunity to renegotiate or exit

• You assume greater risk upfront

  
  

For condominiums:

• You have a protected window to fully understand the agreement

• You can identify risks and walk away if needed

Why Legal Review Is Essential

Whether you are purchasing a condominium or freehold property, a legal review is one of the most important steps in the process.

For condominium purchases, the 10-day cooling-off period is your opportunity to:

• Identify risks and unclear terms

• Understand financial exposure

• Flag problematic clauses

• Make an informed decision before becoming fully committed

  
  

For freehold purchases, legal review should occur before signing, as you may not have a second chance.

Before you sign—or before your 10-day period expires—get your agreement reviewed.