Stuck at Closing? 7 Lifesaving Solutions If You Can’t Close on Your Pre-Construction Condo or House in Canada

Key Takeaways

If you can’t close on your pre-construction condo or house, don’t panic—there are practical solutions like assignment sales, negotiating with the builder, or exploring debt relief options such as consumer proposals or bankruptcy. Professional help is available, and reaching out early can protect your finances and peace of mind.

Buying a pre-construction condo or house is often a dream come true. But for some, the excitement turns to stress when unexpected financial hurdles make it impossible to close. Whether due to rising interest rates, job loss, or market changes, not being able to close on your purchase is more common than you think—and you're not alone.

The good news? There are real, practical solutions that can help you regain control. This article walks you through your best options, including debt relief tools like consumer proposals, along with professional guidance you can trust.

Understand Why You Can’t Close

Before diving into solutions, take a step back to pinpoint why you’re unable to close:

• Has your mortgage financing fallen through?

• Did the property's value drop significantly compared to the purchase price?

• Has your income or credit situation changed?

• Are interest rates higher than expected, making your monthly payments unmanageable?

• Understanding the root cause will help you explore the best next steps.

What Happens If You Don’t Close?

Failure to close can have serious consequences:

• Loss of Deposit: You could forfeit thousands of dollars already paid.

• Lawsuits: The builder may sue for damages, especially if they sell the unit at a lower price.

• Credit Damage: A failed closing may affect your credit rating.

• Debt Stress: Legal fees and settlement payments can add to existing financial burdens.

Thankfully, you have options—and many people have been in a similar situation.

Option 1: Try to Re-Sell or Assign the Unit

Some developers allow you to assign the purchase agreement to another buyer, effectively transferring the contract.

Pros:

• Avoids closing costs

• Helps recover some or all of your deposit

Cons:

• Developer approval is needed

• There may be assignment fees

• Market conditions may impact your ability to find a buyer

Option 2: Negotiate with the Builder

If you're honest and upfront, some builders may offer:

• Extended closing dates

• Reduced penalties

• Payment plans for remaining balances

Always get professional legal advice before signing any amended agreements.

Option 3: Seek a Co-Signer or Mortgage Partner

If your mortgage financing fell through, consider:

• Bringing in a co-signer with a stronger credit profile

• Partnering with someone else to close on the purchase

• Look to an alternative lender such as a private mortgage which are more flexible with its approval criteria

This may help you qualify for a loan, but make sure legal agreements are in place to protect all parties.

Option 4: File a Consumer Proposal

If you're facing severe debt stress, a consumer proposal might be your best bet. It's a legally binding agreement between you and your creditors, arranged by a Licensed Insolvency Trustee (LIT).

Benefits:

• Stops legal action and collection calls

• Allows you keep your assets (including your home, if applicable)

• Typically reduces the amount you owe and spreads payments over five years

Best for: Individuals with unsecured debts under $250,000 (excluding mortgage)

Option 5: Division I Proposal

If your debt exceeds $250,000, you can file a Division I Proposal—a more complex but powerful tool under the Bankruptcy and Insolvency Act.

Benefits:

• Stops lawsuits and garnishments

• Offers greater flexibility in terms of repayment plans

• Protects large asset portfolios or business interests

This option is suitable for higher-income earners or business owners in distress.

Option 6: Bankruptcy

Bankruptcy is a last-resort option, but sometimes it's the fresh start you need.

What to know:

• It's a legal process that discharges most of your debts

• You may have to surrender certain assets, although many are protected

• It can stop wage garnishments, legal actions, and creditor harassment immediately

If closing on your pre-construction property would lead to unmanageable debts that you can't repay, this may be the responsible way out.

Option 7: Speak to a Professional

The most critical step? Don’t try to navigate this alone.

Every situation is unique, and talking to professionals can help you make the best decision, inlcuding:

• Mortgage broker who can review different types of mortgage options

• Real estate agent who can help you assign your purchase agreement to another buyer

• Real estate lawyer who can review your contract with the builder and see what you are liable for and your options for working with the builder

• Licensed Insolvency Trustee can uncover solutions you didn’t even know existed. Whether it's restructuring debt, negotiating with creditors, or protecting your assets, expert help is your safety net.

Your Next Step: Get Help from Litvack Group

If you’re feeling overwhelmed, we’re here to help.

👉 The Litvack Group offers FREE, confidential consultations to help you explore your options and move forward with peace of mind.

You don't have to lose sleep, your deposit, or your financial future. Contact the Litvack Group today—and take the first step toward financial stability.

FAQs

1. What is a consumer proposal and how does it help?

A consumer proposal is a formal government-regulated agreement to pay a portion of your debts over time to your creditors. It protects you from legal action, stops interest, and lets you avoid bankruptcy.

2. Will I lose my home if I file for bankruptcy?

Not necessarily. Many assets, including homes, can be protected in bankruptcy, depending on your province and equity amount.

3. Can I assign my pre-construction contract to someone else?

Yes, if the builder allows assignments. However, conditions and fees may apply.

4. How quickly can I get help from a Licensed Insolvency Trustee?

You can often get a same-week appointment, and protections like halting collection calls begin immediately after filing.

5. What’s the difference between consumer and Division I proposals?

Consumer proposals are for debts under $250,000 and are simpler. Division I proposals are for larger debts or more complex financial situations.