Starting January 1, 2027, Ontario buyers entering into qualifying agreements for new freehold homes will have a 10-day cooling-off period during which they can rescind the purchase agreement.
The change gives buyers time to review a builder agreement after signing, obtain legal and financial advice, understand closing dates and adjustments, and decide whether they are comfortable proceeding. It also brings an important new protection to a category of new-home buyer that historically did not have the same general cooling-off right available to purchasers of new condominium units.
The protection is useful, but it should not change how carefully a buyer approaches the purchase.
A new-home agreement can contain provisions dealing with closing delays, deposits, adjustments, upgrades, development charges, title restrictions, easements, construction changes, financing and other obligations that may affect the buyer long after the 10-day period ends.
The cooling-off period creates time to review those issues. It does not make them disappear.
The new cooling-off period gives qualifying purchasers of new freehold homes a limited right to cancel the purchase agreement after it has been signed.
Beginning January 1, 2027, Ontario’s New Home Construction Licensing Act framework requires vendors of covered new freehold homes to provide prescribed information to purchasers. The required documents include the applicable new freehold home addendum and the standardized Information for Buyers of New Freehold Homes sheet.
Those documents must be completed, signed and included with the purchase agreement.
For a covered purchase, the agreement is not binding on the purchaser until the required information has been delivered and the prescribed requirements have been satisfied. For a covered purchase, whether and when the agreement becomes binding on the purchaser depends on the delivery of the prescribed information and satisfaction of the applicable statutory requirements, including the purchaser’s rescission rights.
The purchaser’s 10-day rescission period begins on the latest of the prescribed triggering events, including receipt of the required information, satisfaction of the prescribed requirements, and receipt of the purchase agreement executed by both parties.
The starting point is important because the 10 days do not necessarily begin on the day the buyer first signs the agreement.
The legislation measures the rescission period from the latest of three events:
This matters where documents are signed or delivered at different times.
Buyers should keep copies of the signed agreement, addendum, information sheet and delivery correspondence so there is a clear record of when each document was received.
If a buyer is considering rescinding the agreement, the deadline should be confirmed early rather than estimated informally.
The new cooling-off protection applies to qualifying purchase agreements for new freehold homes entered into on or after January 1, 2027.
In practical terms, this may include newly built freehold houses purchased from a licensed vendor or builder where the transaction falls within the new-home regulatory framework.
The effective date is tied to the purchase agreement.
An agreement signed before January 1, 2027 does not become eligible simply because construction or closing occurs in 2027.
Buyers should therefore confirm both the type of property and the date the purchase agreement was entered into.
The new freehold cooling-off period does not apply to every type of new-home transaction.
Ontario Regulation 290/26 excludes:
Those distinctions can be difficult to identify from the way a development is marketed.
A property may look and function like a freehold house while still being legally connected to a condominium structure. Buyers should confirm the legal form of ownership rather than relying only on the sales description.
New and pre-construction condominium purchasers already have a separate cooling-off right under Ontario’s Condominium Act framework.
A purchaser of a qualifying new or pre-construction condominium generally has 10 days to rescind after receiving the required purchase agreement, disclosure materials and condominium buyers’ guide.
The January 2027 change is significant because it extends a comparable opportunity for review to qualifying new freehold home purchases, although the statutory frameworks and triggering documents are not identical.
Buyers should therefore determine which regime applies to their transaction instead of assuming every new home follows the same cancellation rules.
A buyer who wants to exercise the new statutory right must give the vendor written notice of rescission.
The vendor must receive that notice within the applicable 10-day period.
That makes the method and timing of delivery important. A buyer should not assume that telling a sales representative verbally, leaving a voicemail or sending an informal message is enough.
The notice should be handled carefully and delivered in a manner that creates reliable evidence of receipt.
If a buyer is considering cancelling, obtaining legal advice before the deadline can help confirm whether the statutory right applies and how the notice should be delivered.
If the purchase agreement is properly rescinded under the new cooling-off provisions, the vendor must promptly refund the money received from the purchaser under the purchase agreement and credited toward the purchase price.
The refund must be made without penalty or charge.
The legislation also provides for interest calculated at the prescribed rate from the date the vendor received the money until the refund is made.
For buyers, that means the cooling-off period is designed to be a genuine cancellation right rather than a right that can only be exercised by forfeiting the deposit.
That protection depends on the statutory rescission requirements being followed properly.
Builder agreements can be lengthy and heavily customized. The cooling-off period gives buyers an opportunity to look beyond the floor plan and purchase price.
A legal review may identify provisions affecting:
Some of these terms may be standard within new construction. Others can have a material financial or practical effect on the buyer.
The cooling-off period is most useful when the buyer uses it to understand those obligations before the statutory rescission period expires.
Ten days can pass quickly when financing is still being arranged.
A mortgage pre-approval is not always the same as final approval for the specific property. The lender may need to review the agreement, appraisal, purchase price, borrower information or other conditions before committing to fund the transaction.
New-construction purchases can also involve a significant gap between signing and closing. A buyer’s income, interest rates, credit profile or lending conditions may change before completion.
Buyers should use the cooling-off period to understand the financing requirements in the agreement and discuss the transaction with their lender or mortgage professional.
A statutory cancellation right does not mean the builder agreement automatically contains a financing condition protecting the buyer after that period expires.
The advertised purchase price may not represent the final amount required to close.
Depending on the agreement and development, buyers may encounter adjustments for matters such as:
Some agreements cap particular adjustments. Others may not.
Reviewing the agreement during the cooling-off period gives buyers an opportunity to understand these costs while they still have a statutory decision window.
A cooling-off period gives the purchaser a right to rescind a covered agreement. It does not necessarily require the builder to renegotiate the contract.
A buyer may ask for a change, clarification or amendment, but the vendor may not agree.
That distinction matters.
The buyer’s decision during the 10-day period may ultimately be whether the agreement, as offered, is acceptable.
Legal review can help separate provisions that are standard, provisions that deserve clarification and terms that create a risk the purchaser is not comfortable accepting.
For qualifying purchases entered into on or after January 1, 2027, the new regulatory framework requires additional standardized documents.
Buyers should expect to review the applicable:
These documents should be reviewed together.
A provision buried in a schedule can be just as important as something appearing on the first page of the agreement.
The new cooling-off period gives buyers a defined window. Using that time deliberately can reduce last-minute decisions.
During the review period, buyers should:
Do not treat the final day as the beginning of the review.
Ontario’s new cooling-off period gives qualifying new freehold purchasers something valuable: time.
What buyers do with that time matters more.
The purchase agreement can affect how much the buyer ultimately pays, applicable closing dates, changes the builder may be permitted to make, consequences of construction delays, restrictions affecting the property, and remedies that may be available if issues arise.
Once the cooling-off period expires, cancelling simply because the buyer later dislikes a clause may no longer be an option.
The better use of the new protection is to treat the 10 days as a review period, not as permission to sign first and think about the transaction later.
Buying a new freehold home in Ontario? Pace Law Firm’s Real Estate team can review the purchase agreement, builder schedules, closing costs and new-home documents during the cooling-off period so buyers understand the commitment before the deadline passes.
Starting January 1, 2027, qualifying purchasers of new freehold homes have a 10-day period in which they may rescind the purchase agreement after the statutory timing requirements have been triggered.
The period runs from the latest of the date the purchaser receives the required information, the date the prescribed requirements for that information are satisfied, and the date the purchaser receives the purchase agreement executed by both parties.
No. The new cooling-off provision does not apply to a purchase agreement entered into before January 1, 2027, even if the home closes after that date.
No. Important exclusions include new freehold homes on units in vacant land condominium corporations, freehold homes on parcels of tied land connected to common-elements condominium corporations, and construction contracts.
New and pre-construction condominium buyers already have a separate 10-day cooling-off right under Ontario’s condominium legislation. The legal framework and documents that trigger the condominium period are different from the new freehold rules.
If the statutory requirements are met and the vendor receives written notice of rescission within the required period, the vendor must promptly refund qualifying amounts paid toward the purchase price without penalty or charge, together with applicable interest.
The purchaser must give written notice of rescission to the vendor, and the vendor must receive it within the applicable 10-day period. Buyers should confirm the deadline and use a delivery method that provides reliable evidence of receipt.
Legal review is still important. The cooling-off period gives buyers time to review the agreement, but it does not remove issues involving closing adjustments, deposits, delays, assignment restrictions, title matters, financing, builder rights or other contractual obligations.
Call us now or fill out the form to discuss your case with an experienced legal professional.
191 The West Mall, Suite 1100
Toronto, ON M9C 5K8
Phone: 1-877-236-3060
Fax: 416-236-1809
191 The West Mall, Suite 1100
Toronto, ON M9C 5K8
Phone: 1-877-236-3060
Fax: 416-236-1809