Ontario lender refuses to ease its 70% presale rule as condo projects get shelved. Is your pre-construction deposit safe?

Meridian Credit Union says it won’t ease its construction lending criteria for Ontario condo developers, even as weak presales leave some projects unable to break ground. Kevin VanKampen, Meridian’s head of business banking, told The Globe and Mail that selling 70% of a project’s units before receiving construction financing remains a sound benchmark.

The decision comes as two parts of the Toronto-area condo market move in opposite directions. More buyers are picking up units in completed buildings, while fewer are committing to homes that exist only on paper. For someone shopping for a condo, that means there’s plenty of supply to choose from today, even as some pre-construction projects struggle to get built.

Why Meridian is sticking with the 70% benchmark

Condo developers typically sell units before construction to show lenders there’s enough demand for the project. The Globe reported that lenders generally expect developers to sell about 70% of units before providing construction financing. That target was much easier to achieve when individual investors accounted for most pre-construction purchases in the Toronto region. But that’s no longer the case. With many of those buyers on the sidelines, developers have been asking lenders to ease the threshold so more projects can proceed.

VanKampen told the Globe that lowering the threshold could leave lenders exposed to more unsold units if a developer ran into financial trouble. With condo prices falling, he said “that type of an environment would not be particularly inviting for lenders to take what some would perceive to be a bit of a speculative way of lending.” According to condo research firm Urbanation, there were 5,127 completed, unsold new condo units in the Greater Toronto and Hamilton Area (GTHA) at the end of Q3 2026. That’s down 7% from the previous quarter but still 40% higher than a year earlier. Those unsold units are exactly what lenders fear inheriting.

Projects that can’t hit 70% often don’t get built. Developers that can’t sell enough units to secure financing may have to postpone or cancel. Shaun Hildebrand, president of Urbanation, told the Globe he expects projects to keep getting shelved if the threshold stays where it is. One of the most recent casualties is M6, a planned 58-storey tower with nearly 900 units at the M City development in Mississauga. Developers Rogers Real Estate Development Ltd. and Urban Capital cancelled the project this summer after failing to reach the sales threshold needed to start construction. According to Rogers, all purchase agreements were cancelled and all deposits refunded. In October, Urban Capital bought the remaining M City lands, including the M6 site, from Rogers and said details of the next phases will be announced as plans progress.

A rebound in new condo sales masks a deeper presale slump

Urbanation reported 760 new condo sales across the GTHA in Q3 2026, double the number a year earlier. Completed buildings accounted for 648 sales, or 85% of the total. Investment groups also bought 339 units in bulk transactions, accounting for 45% of all new condo sales that quarter.

At the pre-construction stage, only 60 units were sold across the region during the quarter, down 61% from a year earlier. It was the 12th straight quarter of year-over-year declines. A developer trying to finance a proposed tower needs buyers for that specific building, and while sales at completed projects can help clear existing inventory, they won’t necessarily help a proposed project reach its presale threshold.

What to check before putting down a deposit

If you’re considering a pre-construction condo in Ontario, ask the sales team how many units have sold and whether the developer has secured construction financing. Once you sign, you have 10 calendar days to cancel without penalty, according to the Home Construction Regulatory Authority (HCRA). The clock starts once you’ve received three documents: the agreement of purchase and sale, the builder’s disclosure statement and the Condo Buyers’ Guide. Use that window to have a real estate lawyer review the Condominium Information Sheet and the addendum to your agreement. Look for the dates by which the developer must meet its sales and financing conditions, and ask what happens to your deposit if the project misses either deadline.

If you’ve already purchased a condo and receive a cancellation notice, send it to your lawyer along with your agreement and deposit receipts. Ontario’s Condominium Act requires condo deposits to be held in trust, and if a builder terminates your agreement, your deposit must be returned in full within 10 days. If the builder fails to return the money, Tarion’s deposit protection for condo units covers up to $20,000, plus a limited amount of accrued interest. Ask your lawyer to confirm how your deposit was held and what steps to take if the refund is late.