Things to Consider When Purchasing Pre-Construction


With mortgage interest rates being historically low and continuing to decline, people want to buy residential properties and they want to buy them now. With the construction of residential developments taking between twelve to eighteen months on average and to meet the demand, developers have been offering units for sale in these developments pre-construction, meaning based on the design plans and architect’s renderings for the development. The agreement for sale for the purchase of such a unit is referred to as a prepayment contract and the circumstances under which such contracts may be entered into by developers are regulated under the Real Estate (Dealers and Developers) Act.

Buying a property pre-construction is a much more technical transaction than buying a property which has already been built. There are a number of legal and practical factors that need to be considered. If you are thinking of buying a property ‘off-plan’, a few things to consider are:-

  1. Is the developer registered under the Real Estate (Dealers and Developers) Act? Every developer who proposes to carry out a development scheme within the meaning of the Act and section 36 thereof must, before commencing the development, apply to the Real Estate Board for registration as a developer. Failure to do is an offence under the act which gives rise to criminal liability. If the developer is not registered you will not have any of the protections given to purchasers under the Act.
  2. Is the development going to be a strata? What are the proposed by-laws of the development? Do they prejudice the purpose that you would like to use the property for in any way? Where the development is not a strata, how will the owners therein cooperate for the maintenance of same? Is there an owner’s agreement?
  3. Does the prepayment contract provide a period for completion of the development? Most of these agreements will not have a definite completion period as delays in construction can be caused by a number of factors including weather conditions and the availability of materials and labor. It is useful to avail yourself of a realistic timeline for the completion of construction so that you can plan your affairs accordingly.
  4. Does the prepayment contract provide for escalation of the purchase price due to an increase in the cost of materials, labour or other factors?
  5. Are you getting the same unit as shown in the plan? Many agreements may provide for various aspects of the design of the unit to be adjusted by the developer for different reasons, for example a specific counter top, tile or shingle which was shown in the designs may no longer be available for purchase.  These changes might be as minor as a change in colour to as major as losing a few square feet of unit space.
  6. Does the agreement provide for a defects liability period? A good prepayment contract should allow the purchaser a window of time within which to inspect the finished property and bring any defects in the finishes of the property to the attention of the developer for them to remedy same.

The above list of considerations just begins to scratch the surface and there are so much more important things to consider. Purchasing your place is a huge investment which if done correctly is extremely rewarding; in the converse if done incorrectly it can result in insufferable legal and non-legal issues. A wise purchaser will know that buying pre-construction should only be done under the advice of an attorney who is knowledgeable and experienced in these types of transactions.


Gabrielle Grant is an Associate at Myers, Fletcher & Gordon and is a member of the Firm’s Property Department. She may be contacted at or This article is for general information purposes only and does not constitute legal advice.

This article is for general information purposes only and does not constitute legal advice.

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