The Condominium Act (Ontario) creates rules that builders are required to comply with when they accept deposits from buyers. Essentially, the builder is required to deposit the money into a lawyers’ trust account and the builder is not allowed to access the money until either (i) ownership of the unit is transferred to the buyer, or (ii) the builder has obtained an insurance policy (aka deposit receipt) for the funds. In other words, the builder cannot use the deposit money unless the buyer has already received title to the property, or the builder has insurance in place that will reimburse the buyer for the deposit in the event the builder is unable to complete the agreement.
As such, where the builder and their lawyers follow the rules in the Condominium Act, the deposits are quite safe.
- December 6th, 2019
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