Deposits & financing
Is my deposit protected on a freehold pre-construction home?
Partly. Tarion protects freehold deposits up to 10% of the purchase price to a maximum of $100,000 on homes over $600,000, or $60,000 on homes at or below that. A 20% deposit on a $1.2 million home therefore leaves a substantial uninsured balance.
Partly, and the gap between “protected” and “fully protected” is where low-rise buyers are most exposed without realising it.
The limits
For freehold homes under agreements signed on or after January 1, 2018, Tarion deposit protection is:
| Purchase price | Maximum protection |
|---|---|
| Over $600,000 | 10% of the price, capped at $100,000 |
| $600,000 or less | $60,000 |
Note what the first row says: 10% of the price, and capped at $100,000. Both limbs bite.
Run it on a real number
A $1,200,000 detached home where the builder requires a 20% deposit:
- Deposit you will pay: $240,000
- Tarion protection: 10% of $1,200,000 = $120,000, capped at $100,000
- Uninsured: $140,000
That $140,000 depends entirely on the builder’s solvency and on your agreement. If the builder fails, it is an unsecured claim.
Even at a standard 10% deposit on the same home, $120,000, protection caps at $100,000, leaving $20,000 uncovered.
This is different from condos
Condominium deposits get trust protections under the Condominium Act in addition to Tarion coverage. Freehold deposits do not have that second layer. It is another instance of freehold buyers having less statutory protection than condo buyers on a larger purchase.
The 45-day registration requirement
Freehold purchasers are expected to register the purchase with Tarion within 45 days of signing, and missing that window is described as reducing deposit protection, potentially to a prorated share of a limited fund rather than the full amount.
Reporting on exactly when this requirement took effect has been inconsistent, so do not rely on a date from any website, this one included. Within a week or two of signing, call Tarion and confirm your purchase is registered, and ask your lawyer to confirm it too. Do not assume the builder did it.
It is the cheapest protective step in the entire transaction and it protects the largest sum you have at risk.
How to manage the exposure
- Negotiate the deposit down where you can, or push instalments later. Less money in, less at risk.
- Weigh the builder carefully. With an uninsured balance, the builder’s financial strength is your security. Builder risk.
- Prefer later phases of communities already building over first phases of unserviced land.
- Confirm registration. Then confirm it again.
Let’s look at your deposit exposure against the builder you are buying from.
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