What happens if the builder cancels the project?

Projects do get cancelled. Low-rise is somewhat less exposed than high-rise. There is no minimum-sales threshold to hit before construction can start, and the servicing is usually further along, but it happens, through financing failures, approval problems, or the economics simply ceasing to work.

Getting your deposit back

Your first protection is the agreement, which should provide for the return of deposits on termination. Your second is Tarion deposit protection, which applies where the builder cannot return the money.

For a freehold home, the coverage limits are:

Purchase price	Deposit protection
Over $600,000	10% of the price, up to $100,000
$600,000 or less	Up to $60,000

Those are the figures to check against your own deposit schedule, because they may not cover all of it. This is worth its own read.

The 45-day registration point

Freehold buyers are expected to register the purchase with Tarion within 45 days of signing. Reporting on the timing of this requirement has not been entirely consistent, and the consequence of missing the window is described as reduced protection rather than none.

Because the detail matters and the sources disagree, confirm your registration directly with Tarion and with your lawyer shortly after you sign. Do not assume the builder has handled it, and do not take a web page’s word for the deadline, including this one. It is a short phone call that protects a six-figure deposit.

What you do not get back

Your deposit returns. These do not:

• The market. If you signed at $1,050,000 in 2026 and the project dies in 2029, the replacement home is priced in 2029 dollars.
• Your rebate window. If the cancellation pushes your next purchase past March 31, 2027, the ENHR is gone, up to $80,000.
• Your rate hold, your time, and your plans.
• Interest, in most cases, beyond anything the agreement provides.

This asymmetry is the real risk of pre-construction, and it is not insurable. It is a reason to weigh the builder as carefully as the home.

How to reduce the risk

• Look at the builder’s record. How many communities delivered, and did they close on time?
• Prefer later phases of a community already under construction over the first phase of a greenfield site.
• Check whether servicing and approvals are in place rather than pending.
• Read the termination clauses, some permit the builder to terminate for broadly drafted reasons.

Builder quality is not visible from a price list, and it is the single most useful thing an experienced broker can tell you about a project. Ask before you commit.