What happens if a pre-construction project is cancelled?
By Dinesh Jindal, licensed REALTOR® · Reviewed November 2026
Cancellations are uncommon but real, especially when costs or interest rates rise. Your agreement and Ontario law decide what happens next.
Why projects are cancelled
- Approvals not obtained by the date in the agreement
- Construction financing not secured
- Minimum sales not reached
- Rising costs making the project unviable
These are usually listed as early termination conditions with a deadline.
Your deposit
- Condos: deposits are held in trust or covered by deposit insurance, and returned, generally with interest.
- Freehold: Tarion protects deposits up to set limits; amounts above that depend on the builder.
Reduce the risk
- Prefer projects with approvals in place and construction started or financed.
- Check the builder's record on the HCRA Ontario Builder Directory.
- Keep deposits within Tarion and trust protection where you can.
- Read the early termination conditions before signing.
Quick answers
Do I get my deposit back if the project is cancelled?
For condos, deposits are held in trust or insured and are returned, usually with interest required by the Condominium Act. For freehold homes, Tarion protects deposits up to its limits.
Why do builders cancel projects?
Usually because approvals, financing or minimum sales were not reached by the date set in the agreement, or construction costs rose beyond what the project can carry.
Can a builder cancel and then relaunch at a higher price?
It has happened. Early-termination conditions in the agreement define when a builder may cancel; read them and check the builder's history.
General information, not legal, tax or financial advice. Programs, limits and rebates change; confirm current rules with Dinesh Jindal, your real estate lawyer and your mortgage professional before you sign.