Buying a pre-construction condo can be an exciting opportunity, but it also comes with challenges—especially in an uncertain market where property values and bank appraisals may not match the purchase price. If you’re facing this situation, it’s important to understand your options before making a decision.
As an Ontario real estate lawyer with over 30 years of experience, I’ve guided many buyers through these tricky situations. Here are three key options to consider:
1. Walking Away from the Deal
You might consider backing out of the purchase, but this comes with serious consequences. You’ll likely lose your deposit (typically 5% to 20% of the purchase price), and the developer may take legal action to recover additional losses. This could result in further financial obligations beyond just your deposit.
2. Assigning Your Agreement to Another Buyer
Another option is to assign your Agreement of Purchase and Sale to someone else. This means transferring your contract to a new buyer who takes over your rights and obligations. If you can find an interested buyer, this could help you recover your deposit and avoid closing. However, keep in mind that some contracts limit assignments, and finding a buyer in today’s market may take time.
3. Closing and Selling Immediately
If walking away or assigning the contract aren’t viable options, you could proceed with the purchase and sell the unit right away. This approach can be risky if the market continues to decline, but if the condo is in a desirable area or the market stabilizes, you may be able to recover most (or all) of your investment.
Each of these options comes with pros and cons, so it’s important to make an informed decision based on your situation. If you have questions or need guidance, I’m happy to help—feel free to reach out!
