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Pre-Construction Contracts: Why It Is Essential for a Lawyer to Review
David H. Korman
June 4, 2025
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As a lawyer there is nothing worse than having to explain to clients that are so happy and excited to have bought a pre-construction property that there are significant costs that they will incur that they might not have anticipated or be able to afford as a result of their failure to have their Pre-Construction Contract reviewed by us prior to the expiry of any conditional period or “cooling off” period, if applicable.
Pre-Construction Contracts by their nature are significantly different from an Agreement of Purchase and Sale for a resale property. In addition to unanticipated costs there are a number of other issues that could lead to disappointment, confusion and frustration if not addressed in a timely fashion. The following are some of the issues that have to be considered with Pre-Construction Contracts:
1. HST – is it included in the Purchase Price or in addition to the Purchase Price
2. Deposits – are they insured
3. Occupancy Fees in a condo – how are they calculated
4. Lockers and Parking Spaces in a condo
5. Common Expenses in a condo
6. Termination Rights, Extension Rights, and Delayed Closing Compensation
7. Adjustments in favour of the Builder in addition to the Purchase Price
8. GST/HST New Housing Rebate
9. GST/HST Rental Rebate
10. Prohibition and/or conditions affecting rights to assign, lease, sell, market, advertise
11. Rights in the event of damage and/or incompletion
12. Warning clauses
To avoid disappointment, confusion and frustration it is essential to have a lawyer properly review a Pre-Construction Contract either (i) within a condition period for lawyer review; (ii) within the statutory 10 day “cooling off” period if the property is a condominium; or (iii) before the Pre-Construction Contract is signed.
David is a member of the Law Society of Ontario since his call to the bar in 1985. David has over 35 years of extensive experience as a lawyer in residential and commercial real estate transactions, commercial leasing, corporate and commercial transactions, and private and institutional lending. His client base includes individuals, business entrepreneurs, developers, financial institutions, brokerages, and real estate investment trusts.
David takes an amiable and dedicated approach to practicing law. His focus is on providing his clients with the highest levels of legal service. Clients love working with David, as he always works hard in their best interests with a smile on his face. David’s sports background and leadership skills are highly influential on the growth and success of Kormans LLP as he truly believes in fostering the Kormans LLP environment as both a family and a team!
When David isn’t closing real estate and corporate transactions, David is an avid runner, hiker and sports enthusiast. However, what David enjoys most is spending quality time with his wife, kids, grandkids and friends at home, at the cottage, and on travels.
David is a frequent blogger, as well as a lecturer and panel member at seminars, webinars and workshops for real estate agents, mortgage brokers and home buyers. Please make sure to catch “David & David on Real Estate” – David’s featured Podcast which can be heard on RadioPublic, Spotify, Breaker, Anchor and Google Podcasts, and can be viewed on the Kormans LLP YouTube channel!
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