Can't Close your Pre-Construction Purchase? Top Questions Answered in 2025

You googled “what happens if I can’t close on pre construction” and landed here. Good move.

The next few minutes could save you six figures and years of stress. 

These are the ten questions our real‑estate lawyers hear every week, along with straight answers, real examples, and direction on what to do next.

1. The Bank Pulled My Mortgage a Week Before Closing. What Now?

First, don’t panic, your agreement is still enforceable, but you’re on the clock. 

Ask your lawyer to request a 30‑day extension and submit proof that alternative financing is in process. Builders usually grant it because suing takes longer and costs more. Use the time to approach B‑lenders or private lenders with the new appraisal your lawyer orders. 

2. Will I Lose My Entire Deposit if I Walk Away?

Almost always, yes. Ontario courts treat deposits as a performance guarantee. In 2024 alone, multiple rulings confirmed the builder’s right to keep every cent when the buyer defaulted. Negotiation can soften the blow.  We routinely negotiate with builders for our clients to salvage deposits and reduce their legal exposure.

3. Can the Builder Sue Me for More Than the Deposit?

Absolutely. The builder can claim the resale shortfall, carrying costs, and legal fees. A recent case tagged the buyer for an extra $366,000 after the home sold for less in a cooler market. Judgments of this size are enforceable for years and can lead to wage garnishment or property liens.

4. What Exactly Is a Mutual Termination?

It’s a signed agreement where both parties walk away. The builder usually keeps part of the deposit as compensation, but future claims disappear. Your lawyer drafts the document, negotiates the refund amount, and registers the release on title so the matter is closed for good. Our team can help you negotiate and formalize a mutual termination agreement.

5. How Long an Extension Can I Realistically Get?

Thirty to 180 days is typical, but it depends on the builder. Builders weigh three factors: the size of their unsold inventory, proof that you can fund after the extension, and the fee you’re willing to pay. In our files, fees range from $150 to $400 per day, which is cheaper than litigation and life‑changing if you need time to refinance.

6. If I Assign the Unit, Am I Fully Off the Hook?

Only when the builder signs a novation clause that transfers every liability to the new buyer. Many consent letters leave you secondarily liable, meaning the builder can still chase you if the assignee defaults. Make sure your lawyer’s assignment agreement and Schedule B include a full release.

7. Which Closing Fees Can a Lawyer Actually Reduce?

Development charges are the big one. Toronto buyers have seen levies jump $30 000–$50 000 in the final statement, but a well‑timed amendment can cap or roll back those fees. Lawyers also negotiate credits for delayed registration that offset occupancy fees, and they can often shave builder legal fees and Tarion enrolment costs.

8. Will Walking Away from my Deal Ruin My Credit?

A court judgment appears on your credit report for six or seven years, dragging down scores and blocking prime mortgages. Even a settled lawsuit can show up in public records searches by lenders. Avoid court if you can; a negotiated settlement keeps your bureau clean.

9. How Fast Can My Lawyer Get Builder Consent for an Assignment?

Ten to twenty‑one days is realistic once the new buyer has financing and the deposit ready. Speed depends on how complete the consent package is: buyer ID, mortgage pre‑approval, and a drafted Schedule B. Builders dislike back‑and‑forth; a tidy first submission wins time.

10. When Should I Call a Lawyer?

The moment your gut tells you financing might fail or you might not be able to close.  Ideally 60‑90 days before closing. Early action lets counsel to open negotiations, or launch an assignment campaign before deadlines and penalties pile up.

How can we help?

Our experienced Real Estate Lawyers at Deeded have dealt with thousands of Real Estate Transactions and can help you negotiate a better outcome and reduce your legal risks.

We offer a flat-fee to review your pre-construction contract and negotiate with your builder on your behalf. If you are interested in having our lawyers negotiate for you, contact us and we’d be happy to help.

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Disclaimer: This FAQ is general information, not legal advice. Always consult a qualified real‑estate lawyer about your situation.

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