Presale Deposit Structure Explained

How deposits work in a presale

Unlike a resale purchase — where you put down a deposit on acceptance and pay the rest on closing day — presales spread deposits across multiple stages during construction. You're not paying 20% upfront. You're paying in installments over 12 to 24 months, with the mortgage covering the balance at completion.

A typical Metro Vancouver deposit structure looks something like this: 5% on signing, 5% at 6 months, and sometimes another 5% a year in. Total deposits of 10–15% are standard, though some projects ask for more. On a $900,000 unit, that's $90,000 to $135,000 tied up before you own anything.

Right now, with the market softer than it's been in years, some developers are offering reduced deposit structures — 1% to hold a unit, 5% total — to bring buyers off the sidelines. These can be attractive, but lower deposits also mean less skin in the game for the developer, which is worth thinking about.

Where your deposit goes

BC law requires that all presale deposits be held in trust — either by the developer's lawyer or a licensed trust company. The developer cannot access your money until completion. If the project is cancelled, your deposit comes back to you.

The catch: your money isn't working for you while it sits in trust. You're not earning meaningful interest on it, and if you were otherwise going to invest those funds, you're giving up that upside for the duration of construction.

The financing risk buyers miss

This is the part that catches people off guard. Your mortgage isn't approved at signing — it's approved at completion, based on your income and the interest rate at that time.

Say you signed in 2023 when rates were lower and you qualified for $900,000. If rates have moved by the time your building completes in 2026, your qualification could look very different. A buyer who qualified comfortably at 3.5% may not qualify for the same amount at 5.5%. And if you can't complete, the developer can keep your deposit and potentially sue for additional damages if the unit resells below your contract price.

This isn't a reason to avoid presales. It's a reason to talk to a mortgage broker before you sign — not at completion. Run the numbers at a rate 2% higher than today's best to see if you'd still be fine. If you wouldn't be, either buy lower or wait.

What to ask before you sign

Get the full deposit schedule in writing and make sure you understand exactly when each payment is due. Some contracts tie deposit dates to construction milestones (e.g., "upon excavation completion") rather than calendar dates, which can create uncertainty.

Ask whether the developer has financing in place. A project that hasn't secured construction financing is at higher risk of delay or cancellation. Established developers with a track record of completing BC projects are a safer bet than a first-time developer launching an ambitious concrete tower.

And ask about the assignment clause — whether you can sell your contract to another buyer before completion if your situation changes. Not all contracts allow it, and some charge fees. The assignments guide covers this in detail.

In a buyer's market, deposits are negotiable

That's not always true in a hot market, but right now developers need buyers more than buyers need any specific project. If a deposit schedule feels aggressive, ask for a different structure. The worst they can say is no. Developers offering 1% holds and flexible installment schedules are fairly common right now — especially on projects that are sitting unsold.

The key is knowing what's standard so you can tell when something's off. 10–15% total deposits spread over 12–24 months is normal. Being asked for 20–25% upfront on a project by an unfamiliar developer is a signal to look more carefully.