In today’s real estate market, particularly with the wave of new condo completions in 2024 and 2025, many property owners are facing financial pressures. Whether it’s negative cash flow, falling property appraisals, or forced sales, these situations raise critical legal concerns that buyers, sellers, and families should be aware of.

Pre-Construction Condos and Assignment Sales

Many condo buyers are finding themselves in situations where the appraised value of their units is $100,000 to $200,000 lower than the original purchase price. This results in financing shortfalls that buyers struggle to make up. While some may attempt to negotiate with the builder for price reductions or extensions, most developers are under significant cost pressures and are unlikely to offer concessions.

If you face this issue, speak with your original real estate agent. Developers are often more willing to negotiate through agents than through lawyers. If negotiations fail, consider sourcing funds from family, refinancing other properties, or obtaining a second mortgage.

In rare cases, developers may offer credits or minor relief, but if a buyer defaults, the developer may retain the deposit and seek damages for any losses incurred, including legal fees and resale losses. Thus, it’s critical to avoid default and instead explore assignment sales to transfer the purchase to another buyer.

Assignment Sales: Key Legal Considerations

When transferring a pre-construction condo through an assignment, both parties need legal representation and the builder’s consent. Buyers of assignments must review the builder’s terms to ensure any original incentives (e.g., capped levies, HST rebates) still apply. If not, the deal may become significantly more expensive.

Resale Closings and Delays

Delays in closing resale transactions are increasingly common due to financing challenges. Buyers often ask for extensions, which may be granted by sellers in exchange for additional deposits or compensation. All terms must be clearly documented in a formal extension agreement.

Sellers must still be ready to close on the original date, even if the buyer appears unprepared. Failure to do so could result in sellers being deemed in default. If a buyer defaults, sellers may retain the deposit and pursue legal claims for additional damages.

Tenant-Occupied Properties

If a resale property has tenants, ensure the sale agreement includes a clause that the property will be delivered vacant. Evicting tenants can take months through the Landlord and Tenant Board, and unresolved occupancy can derail the closing.

Marriage Homes and Legal Rights

Under Ontario family law, a “matrimonial home” is any property where spouses live together. Regardless of who holds title, both spouses have equal rights to live in and claim a share of the home’s value. Selling, refinancing, or transferring a matrimonial home requires both spouses’ consent.

To protect their interests, a non-titled spouse can register a Notice of Matrimonial Home on the property title. This prevents the home from being sold or mortgaged without their knowledge.

Joint Tenancy vs. Tenancy in Common

When purchasing property with others, it’s crucial to understand ownership structures. Joint Tenancy provides equal ownership and rights of survivorship, while Tenancy in Common allows unequal shares and individual inheritance rights. Parents co-buying with children often prefer Tenancy in Common to control inheritance or avoid probate.

Adding Children to Title: Pros and Cons

Parents often ask whether to add their children to the property title. While this can simplify inheritance and improve mortgage qualification, it can also complicate taxes, impact the child’s first-time buyer rebates, and expose the property to division in case of the child’s divorce.

It is recommended to evaluate the risks, consult with an accountant, and consider alternatives like family trusts or formal loan agreements with proper documentation.

Family Loans and Protection Strategies

Parents providing down payment assistance should create formal loan agreements or register a second mortgage (family mortgage) on the property. This ensures repayment and protects the funds from being viewed as a gift during divorce proceedings.

Proper documentation, regular interest payments, and treating the arrangement like a legitimate loan (not a silent gift) strengthen legal enforceability.

Final Thoughts

Real estate transactions involve more than just numbers—they touch on legal obligations, family dynamics, and future planning. Whether you’re buying, selling, assigning, or gifting property, it’s essential to get proper legal advice and protect your interests. By understanding your rights and obligations, you can make smarter, safer decisions in today’s challenging market.