Reading a builder's offer: conditions, deposits and closing dates
This guide is for Toronto owners who have an offer from a builder, or expect one. It explains the conditions builders often include, how Ontario's Planning Act treats an agreement that waits for a lot split, the time limits on a severance approval, where a deposit is held and what insurance covers it, what to ask about long closings and assignment clauses, and who represents whom under RECO's rules. It names the questions to take to your lawyer, who gives the legal advice. Each rule comes from an Ontario statute or a RECO document read on November 1, 2026.
Written by Anthony Palleschi · Updated November 1, 2026 · 7 min read
Key takeaways
- Subsection 50(21) of the Planning Act lets a builder sign an agreement that takes effect only if a lot split is approved.
- A builder can apply for a severance or a minor variance on your lot only as your agent, with your written authorization.
- A severance applicant has two years after notice of the decision to meet the conditions, or the application is deemed refused.
- A deposit paid to a brokerage goes into a trust account kept separate from the brokerage's own money.
- RECO's deposit insurance covers up to $200,000 per claim for theft, fraud or insolvency, and not a dispute between buyer and seller.
- An agent or brokerage can act for you and the builder together only if each of you agrees in writing.
What a builder's offer looks like
A builder's offer comes on the same kind of form as any other offer to buy a house in Ontario, called an agreement of purchase and sale. What differs is the content. A family's offer usually depends on a mortgage and an inspection. A builder's offer is more likely to depend on what the City will allow, and it may set a closing date many months away. The price is one line. The conditions, the deposit and the dates decide what that price is worth to you.
This guide explains those parts in plain words and points to the rule behind each one. It is written for owners, so each legal term is explained first. Your lawyer gives the legal advice on your own agreement. Read this guide before you meet your lawyer, so you know which questions to ask. Every rule below comes from an Ontario statute or a RECO document that I read on November 1, 2026.
What is a condition, and which ones do builders use?
A condition is a term that must be met, or given up in writing, before the sale becomes final. Giving up a condition is called a waiver. While a condition is open, the agreement still binds you to that buyer. Ask your lawyer what each condition lets the buyer do, and by which date.
Builders often use two kinds of condition.
- A study period, often called due diligence. The builder checks the zoning, the survey, the soil, the trees, the services and the title before it commits. The agreement sets how many days the builder has, and whether it can enter the property to do tests.
- An approval condition. The sale goes ahead only if the City approves something, such as a lot split or a minor variance.
Ontario's Planning Act allows the second kind for lot splits. Subsection 50(21) says an agreement can be made subject to the express condition that it takes effect only if the lot split rules in section 50 are met. A lot split is called a consent, and most people call it a severance. A minor variance is permission for a small exception to the zoning rules. The Committee of Adjustment, a City panel, decides both, and the Committee of Adjustment guide explains its process.
Can a builder apply to the City for my lot?
Yes, with your written permission, or as the purchaser named in the agreement. The Planning Act sets who may apply.
- For a severance, subsection 53(1) says an owner, a chargee or a purchaser of land, or that person's agent duly authorized in writing, may apply.
- For a minor variance, subsection 45(1) says the Committee of Adjustment acts on the application of the owner, or any person authorized in writing by the owner.
So a builder that wants to apply while you still own the lot will ask you to sign an authorization. Your lawyer can set terms: which application, which drawings, who pays the City fees, and what happens if the City refuses. From January 1, 2026, the City's fee to sever one lot into two is $8,080.65, and a minor variance for a new home with three units or less is $5,011.08. The agreement decides who pays them.
How long can the approval take?
The Planning Act puts outside limits on a severance. Subsection 53(41) says that if the conditions of a consent are not met within two years after notice of the decision, the application is deemed refused. Subsection 53(43) says a consent lapses two years after the City's certificate is given if the sale it was granted for is not carried out in that time, and the consent itself can set an earlier date.
Those limits come after the hearing and after any appeal, which add their own months. A sale that waits for a severance can therefore keep your property under contract for a long time. Ask your lawyer to tie the dates in your agreement to these limits, and to say what happens if a date passes.
| Rule | What it says | Why it matters to the seller |
|---|---|---|
| Subsection 50(21) | An agreement can take effect only if the lot split rules are met | A builder can sign now and close only after approval |
| Subsection 53(19) | An appeal can be filed up to 20 days after notice of the decision is given | Under subsection 53(21), the decision is final only if no appeal is filed |
| Subsection 53(41) | Conditions not met within two years after notice: the application is deemed refused | Sets an outside date for the builder's work on conditions |
| Subsection 53(43) | A consent lapses two years after the certificate if the sale is not carried out | The closing has to happen within that time |
Where is the deposit held, and what protects it?
A deposit is money the buyer pays when the agreement is signed, to show it is serious. Where it is paid to a brokerage, the Trust in Real Estate Services Act, 2002 sets the rules. Section 27 says every brokerage must keep a trust account in Ontario, put trust money into it, keep that money separate from its own, and pay it out only under the terms of the trust. Subsection 27(2) says the brokerage must tell the person paying the deposit, in writing, whether the account pays interest and at what rate. Subsection 27(3) says the interest belongs to the owner of the money unless a contract says otherwise.
RECO's consumer deposit insurance covers losses from brokerage theft, fraud, insolvency or misuse of funds, up to $200,000 per claim and $4 million for all claims from one event. It does not respond when a sale fails and the buyer and seller cannot agree on who gets the deposit. RECO says to speak with a lawyer in that case.
For a builder sale, look at three things: how much the deposit is, when it is paid, and when it becomes yours to keep. Some agreements pay the deposit in parts as conditions are met. Your lawyer explains what happens to the deposit if the builder ends the agreement under a condition, and what happens if it fails to close.
Long closings and the house in the meantime
A long closing gives a builder time for approvals before it pays. For you, the house stays yours until closing, with its costs. Ask your lawyer about insurance, property tax, repairs, who may enter the property and when, and whether you can live in the house or rent it until the closing date.
If the house has tenants and the builder wants it empty, the timing is set by Ontario's Residential Tenancies Act, which requires at least 120 days' notice for a demolition. The guide on how builders price land explains how a tenancy affects the offer. Who gives the notice, and when, belongs in the agreement.
What is an assignment clause?
An assignment clause lets the buyer pass its rights under the agreement to someone else, often another company. A builder may sign with one company and close with another, or sell the agreement to a second builder. The clause can be allowed, refused or limited, for example to companies the builder controls. Ask your lawyer what the clause in your offer allows, and whether the original buyer stays responsible if the new one does not close.
| Part of the offer | Question for your lawyer |
|---|---|
| Study period | How many days, and can the builder end the deal for any reason in that time? |
| Approval condition | Which approval, who applies, who pays, and what if the City approves less? |
| Deposit | How much, when, held by whom, and when is it mine to keep? |
| Closing date | Does it match the Planning Act time limits, and can it move? |
| Access to the lot | Who can enter for surveys and tests, with what notice and insurance? |
| Assignment clause | Can the builder pass the agreement to another company, and who stays responsible? |
| Tenants | Will the house be sold empty or with the tenancy, and who gives notice? |
Who represents whom?
Under RECO's rules you are either a client of a brokerage or a self-represented party. A client signs a written representation agreement, and the brokerage owes that client loyalty, disclosure, confidentiality and the duty to avoid conflicts. A self-represented party has no agent of their own.
RECO's Information Guide describes two kinds of agreement. In brokerage representation, the brokerage and all its agents act for you. In designated representation, introduced on December 1, 2023, one or more named agents act for you and the rest of the brokerage treats you impartially.
When the same brokerage or agent acts for both you and the builder, RECO calls it multiple representation. It is allowed only if each client agrees in writing after a written disclosure. Once you agree, the agent must treat both clients impartially and cannot advise you on the price to accept or the terms to include. You can refuse.
If the person presenting the offer works for the builder, they must share what you tell them with the builder. Keep your lowest price and your plans to yourself, and ask first who they work for. When I act for an owner, I compare the offers with the owner and point out the questions for the lawyer and the accountant. The lawyer gives the legal advice.
Questions to ask before you sign
- What has to happen before this sale is final, and by which date?
- Who applies to the City, and who pays if the City says no?
- Where is my deposit held, and when is it mine to keep?
- Can the builder pass this agreement to another company?
- Who does each agent in this deal work for?
The For Sellers page shows how I compare offers with owners, and selling with your neighbours covers offers that depend on several lots. My post on Toronto's low-rise neighbourhoods explains why builders want these lots. To talk through an offer before you meet your lawyer, use the contact page. Which of these conditions could keep your property off the market, and for how long?
Frequently asked questions
What conditions can a builder put in an offer for my Toronto house?
A builder can put conditions in an offer for your Toronto house such as a period to check the zoning and the survey, or approval of a lot split or a minor variance. Subsection 50(21) of Ontario's Planning Act allows an agreement made subject to the express condition that it takes effect only if the lot split rules are met. Your lawyer writes or reviews each condition.
Can a builder apply for a severance on my lot before buying it?
A builder can apply for a severance on your lot before buying it, as a purchaser or as your agent with written authorization. Subsection 53(1) of Ontario's Planning Act says an owner, chargee or purchaser of land, or their agent duly authorized in writing, may apply for a consent. Ask your lawyer what the agreement should say about who applies and who pays.
Does a builder need my permission to apply for a minor variance on my property?
A builder needs your written permission to apply for a minor variance on your property while you still own it. Subsection 45(1) of Ontario's Planning Act lets the Committee of Adjustment hear a variance on the application of the owner, or any person authorized in writing by the owner. Your lawyer can set terms for that permission in the agreement of purchase and sale.
How long can a severance condition keep my sale to a builder waiting?
A severance condition can keep your sale to a builder waiting up to two years after the decision for the conditions alone. Subsection 53(41) of Ontario's Planning Act says that if the applicant has not met the conditions within two years after notice of the decision, the application is deemed refused. The hearing and any appeal add their own time before that.
Can a severance approval expire before my sale to a builder closes?
A severance approval can expire before your sale to a builder closes if the sale is not completed in time. Subsection 53(43) of Ontario's Planning Act says a consent lapses two years after the certificate is given if the transaction is not carried out in that period, and the consent may set an earlier date. Ask your lawyer to match the closing date to it.
Where is a builder's deposit held when I sell my house in Ontario?
A builder's deposit paid to a brokerage when you sell your house in Ontario is held in the brokerage's trust account. Section 27 of the Trust in Real Estate Services Act, 2002 says every brokerage must keep a trust account in Ontario, keep that money separate from its own, and pay it out only under the terms of the trust. Your agreement says who holds the deposit.
Who earns the interest on a deposit held in trust in Ontario?
The person who owns the deposit earns the interest on it in Ontario, unless a contract says otherwise. Subsection 27(3) of the Trust in Real Estate Services Act, 2002 says interest on trust money is paid to its beneficial owner. Subsection 27(2) says the brokerage must tell the depositor in writing whether the account pays interest, and at what rate the brokerage receives it.
Is a builder's deposit insured if something goes wrong in Ontario?
A builder's deposit held in a brokerage trust account in Ontario is insured against brokerage theft, fraud, insolvency or misuse of funds. RECO's consumer deposit insurance page says coverage is up to $200,000 per claim and $4 million for all claims from one event. It does not respond when buyer and seller simply disagree over who gets the deposit after a failed sale.
Can the builder's agent also represent me when I sell my house?
The builder's agent can also represent you only if you, the builder and every other client involved agree in writing. RECO's Information Guide calls this multiple representation and says the brokerage must first give each client a written disclosure. Once you agree, the agent must treat both sides impartially and cannot advise you on the price to accept or the terms to include.
What is the difference between brokerage representation and designated representation in Ontario?
Brokerage representation in Ontario means the whole brokerage and all its agents act for you, while designated representation means one or more named agents act for you and the rest of the brokerage stays impartial. RECO's Information Guide says designated representation was introduced on December 1, 2023, and that it reduces the chance of multiple representation. Ask which type the brokerage offers.
What happens to my listing agreement if I refuse multiple representation?
What happens to your listing agreement if you refuse multiple representation depends on what the agreement says. RECO's Information Guide says you do not have to agree to multiple representation. It says the agreement could end completely, or you could be referred to another brokerage or designated representative for that sale while the rest of the agreement stays in place. Read that clause before you sign.
Sources
- Planning Act, R.S.O. 1990, c. P.13. Government of Ontario, e-Laws. Current version from July 1, 2026. Accessed November 1, 2026.
- Trust in Real Estate Services Act, 2002, S.O. 2002, c. 30, Sched. C. Government of Ontario, e-Laws. Current version from December 1, 2023. Accessed November 1, 2026.
- Working with a real estate agent: Things you need to know (RECO Information Guide, Residential). Real Estate Council of Ontario. Content December 1, 2023, graphics April 2025. Accessed November 1, 2026.
- Consumer deposit insurance. Real Estate Council of Ontario. No date shown. Accessed November 1, 2026.
- Residential Tenancies Act, 2006, S.O. 2006, c. 17. Government of Ontario, e-Laws. Current version from September 21, 2026. Accessed November 1, 2026.
- Committee of Adjustment Forms, Submission Guidelines and Fees. City of Toronto. Modified October 8, 2026. Accessed November 1, 2026.
Planning and development potential is property-specific and subject to zoning, approvals, site conditions, municipal review and other due diligence. This guide gives general information. For legal, tax or financial advice, ask your own lawyer and accountant.