Deposit Structure

Understand how deposit structures work in Canadian real estate, especially for pre-construction purchases, and how they affect your financial obligations.

Deposit Structure

May 22, 2025


What is Deposit Structure?

Deposit structure refers to the schedule and breakdown of payments a buyer must make as a deposit when purchasing a property, especially in pre-construction real estate transactions.

Why Deposit Structures Matter in Real Estate

In Canada, especially in hot real estate markets, pre-construction condo purchases often involve a staged deposit structure rather than a single lump sum. This makes large purchases more manageable and gives the builder security during the development process.

A typical deposit structure might include:
- 5% upon signing the Agreement of Purchase and Sale
- 5% in 90 days
- 5% in 180 days
- 5% at occupancy

The total deposit often ranges from 15% to 25%, depending on the developer and market. These deposits are usually held in trust and protected under provincial legislation.

Understanding the deposit structure is vital for financial planning. Missing a payment deadline may jeopardize the contract or incur penalties. Buyers should also confirm whether deposits are refundable under specific conditions.

Example of Deposit Structures in Action

A buyer agrees to a 20% deposit structure for a pre-construction unit: 5% at signing, 5% in 90 days, 5% in 180 days, and 5% at interim occupancy.

Key Takeaways

  • Defines the schedule for deposit payments.
  • Common in pre-construction transactions.
  • Total deposit may range from 15% to 25%.
  • Deposits are held in trust.
  • Must be paid on time to keep contract valid.

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