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10-day Cooling Off Period

Continuing our Pre-construction Guide series, today we focus on a provision that can be a lifesaver for prospective buyers but often goes unnoticed: the 10-day cooling-off period. This safeguard, mandated by Section 73 of the Condo Act, provides buyers with a safety net after making a big financial plunge into pre-construction condos. 

According to a 2019 report by Urbanation, 20,000 new condos were sold in Toronto alone, highlighting the booming market. However, it’s not uncommon for buyers to experience buyer’s remorse. This makes the 10-day cooling-off period an invaluable tool in your home-buying toolkit. 

What is the 10-Day Cooling Off Period?

The Cooling Off period kicks in the moment you and the developer sign the Agreement of Purchase and Sale. You also receive important documents like the Disclosure Statement, HCRA (Home Construction Regulatory Authority), Tarion Warranty Information Sheet, and the Condo Guide during this time.

Why is it important to know about the cooling off period? 

During these 10 days, you have the complete freedom to reconsider your decision without facing any penalties. Unlike other commitments where backing out might cost you, this period allows you to:

  • Reassess Your Decision: Whether you’re having second thoughts or found another property you like more, you can change your mind without any strings attached.
  • Review the Contract: This is an ideal time to consult with a pre-construction lawyer who can study the Agreement of Purchase and Sale on your behalf. They can highlight any unfavorable terms and help you understand the contract’s nuances.
  • Calendar Days, Not Business Days: This is 10 straight days, including weekends and holidays. It’s your golden window to do all the above without feeling rushed.
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How to Make the Most
of It?

1. Consult a Pre-Construction Lawyer

Using this time effectively involves talking to experts. While you might think you understand the general gist of the contract, there could be terms or clauses that are not in your favor or that expose you to undue risk. A pre-construction lawyer goes beyond merely highlighting these terms; they can also advise you on potential renegotiations and your best course of action. 

2. You Can Walk Away

If you decide this investment isn’t for you, all you need to do is send a written notice to the developer or their lawyer. It’s crucial that this written communication takes place within the ten-day window to be valid. Once received, the developer is legally bound to refund your deposit in full. 

3. Extended Rights to Rescind

There might be certain conditions under which your right to back out extends. For example, a ‘material change’ in the project, which could range from a change in the square footage of the unit you were promised to the sudden removal of key amenities like a swimming pool or fitness center. If such a material change occurs, you may have the right to activate another 10-Day Cooling Off period, giving you another opportunity to reconsider your investment. 

Consider your finances

Before taking the plunge, it’s essential to consider all the financial aspects, including closing costs. In Toronto, a $600,000 condo could have closing costs ranging between 8 to 10% of the property value. These costs can include reserve fund contributions, realty taxes, and even buyer’s legal fees.

Budgeting for these closing costs in advance is more than just a smart move; it’s a necessity. The last thing you want is to find your dream condo, only to realize later that you can’t afford the final financial hurdle. Consult with a financial advisor and possibly a pre-construction realtor to get a clearer picture of what you can expect to pay.

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Learning about the pre-construction industry before investing in a unit is crucial for your investment. Continue reading our pre-construction buying guide here.