How Pre-Construction Deposit Structures Actually Work

Most buyers walk into a pre-construction purchase expecting a deposit to work the way it does on a resale home: one number, due once. Pre-construction deposits are staged over months or years, and understanding how that schedule is built — and where the money actually goes while you wait — changes how you should be reading any agreement in front of you.

It's staged, not a lump sum

Condo deposits typically total somewhere between 15% and 20% of the purchase price, broken into scheduled instalments — commonly something like 5% on signing, followed by further 5% instalments at set intervals over the following months or years leading up to occupancy. Freehold and townhome deposits often move on a different, sometimes faster, schedule. The total and the pacing both vary by builder and by how a project is selling.

Where your deposit actually goes

Deposit funds on a condo purchase are generally required to be held in trust — typically by a lawyer or licensed trust company acting as trustee — until they're released under the specific trust conditions in your agreement, rather than handed straight to the builder to spend. Some builders instead post security, such as a letter of credit or deposit insurance, in place of holding your actual cash in trust. Both structures exist; which one applies to your purchase is worth confirming directly rather than assuming.

• Ask who the trustee actually is, by name, not just "a lawyer."
• Ask what conditions release the funds from trust, and when.
• If security is posted instead of cash held in trust, ask what that security actually is and who backs it.

Deposit protection if something goes wrong

Program limits and the specifics of what's covered do change, and coverage details differ between condo and freehold structures — confirm the current limits and exactly what's protected for your specific purchase before you rely on a number you read somewhere else, including this page.

What's actually negotiable

Deposit size and pacing are often more flexible than buyers assume, especially outside of a project's hottest early release. In slower-absorption periods, an extended or reduced deposit structure is frequently one of the first things a builder will move on, sometimes before they'll move on price at all.

Have a real estate lawyer review the trust conditions and deposit protection provisions in your specific agreement before firm signing — this is general information, not a substitute for that review.