The Hidden Risks of Assigning a Pre-Construction Home in 2026: What Ontario Buyers Must Know

Assigning a Pre-Construction in Ontario: Will Liability Still Follow the Assignor After January 1, 2026?

There are big changes coming for anyone assigning a pre-construction condo, townhouse or freehold in Ontario – and they go straight to the heart of who can be treated as the “purchaser” and whether liability can still follow the assignor after an assignment.

Just as every real estate lawyer does for fun, I was re-reading legislation in the sauna (and on the treadmill), and I noticed something that every new-home purchaser and every investor assigning a pre-construction unit needs to understand.

Ontario has passed the Homeowner Protection Act, 2024 (Bill 200), which amends the New Home Construction Licensing Act, 2017 (NHCLA). Some of these changes, together with related regulations and Tarion policy, are set to roll out on or around January 1, 2026.Legislative Assembly of Ontario+1

At first glance, these amendments look like “consumer protection.” But if you’re doing an assignment of a pre-construction Agreement of Purchase and Sale (APS), the new wording raises a serious question:

Can the assignor still be treated as a “purchaser” – and stay on the hook – even after assigning the deal?

Let’s break it down.

Quick refresher: what is a pre-construction assignment?

In a typical pre-construction assignment in Ontario:

• The builder/vendor signs a pre-construction APS with the original buyer (the “first purchaser”).

• Before closing, that purchaser assigns their interest in the APS to a new buyer (the assignee).

• The assignee pays an assignment price and completes the deal directly with the builder at final closing.

In theory, the assignee “steps into the shoes” of the original purchaser.

In practice, under common law, the contract with the builder is still between the builder and the original purchaser, unless the builder expressly agrees to a formal release. Many legal commentators have pointed out that an assignor may still remain liable in certain circumstances, even after assignment, if the builder hasn’t clearly released them.

That’s the starting point: assignment ≠ automatic release.

What’s changing: the new definition of “purchaser”

The NHCLA is amended to add a definition of “purchaser”. The definition now says, in substance, that a purchaser is:

• A person who enters into a purchase agreement with a vendor for a new home; and

• It also includes an assignee of the purchaser’s interest in that purchase agreement.

In other words:

• The original buyer is a “purchaser”.

• The assignee is also a “purchaser”, because the assignee has taken an assignment of the purchaser’s interest.

Red flag: it’s not just “the purchaser or the assignee” as separate categories. The legislation folds the assignee inside the definition of “purchaser” by explicitly including “an assignee of the purchaser’s interest” in the purchase agreement.

For assignment of pre-construction condos and freehold homes, that’s significant. It means when the Act or regulations talk about purchasers, they are potentially talking about:

• The original buyer (assignor), and

• The assignee who takes over.

Updated s. 53: more focus on agreements and “the parties”

The NHCLA adds new sections. The key piece:

• A purchase agreement, and the parties to the purchase agreement, must meet the requirements set out in the regulations.

• A construction contract, and the parties to that contract, must also meet regulatory requirements.

So it’s no longer just “what must the vendor or purchaser do?” – it’s what must the agreement and all parties do, which matters when you have:

• A builder/vendor,

• An original purchaser (assignor),

• An assignee who steps in later.

Section 83: from “the purchaser/owner” to “the parties”

Section 83(1) of the NHCLA gives the Lieutenant Governor in Council regulation-making power.

• s.83(1)(g) now lets regulations govern purchase agreements, including setting requirements for the purposes of s.53.1(1); and it speaks about:

  • “requiring the agreements or the parties to each agreement to include certain terms or conditions” and

  • “prohibiting the agreements or the parties to each agreement from including certain terms or conditions.”

• s.83(1)(g)(iv) is amended so that where it used to refer to “the purchaser”, it now refers to “the parties”.

• s.83(1)(h) is amended in parallel for construction contracts, changing references from “the owner” to “the parties” and again emphasizing requirements that can be imposed on:

  • the contract, or

  • the parties to each contract.

Put bluntly: the regulation-making powers have shifted focus from a single party (purchaser/owner) to all parties to the agreement.

When you combine that with the expanded definition of “purchaser” (which now may include assignees of the purchaser’s interest), you can see why anyone assigning a pre-construction deal needs to pause.

So… can the builder still come after the assignor?

Here’s the honest answer:

We won’t know exactly how far this goes until the amendments are fully in force, regulations are made and the courts start interpreting them.

However, based on the structure of the law and existing assignment practice in Ontario, here are the realistic risk zones for assignors of pre-construction deals:

1. No release
   If the builder never signs a proper release of the assignor, the original APS is still between the builder and the original purchaser. Assignment alone usually doesn’t erase that relationship.

2. Regulatory obligations on “the parties”
   Because regulations can now impose obligations on “the parties to each agreement”, there is a risk that compliance duties, disclosures or prohibited terms could tie back to both:

   • the assignor purchaser, and

   • the assignee purchaser.

3. Default by the assignee
   If the assignee defaults (can’t close, breaches terms, or triggers termination), a builder might argue that the original purchaser remains liable for losses, especially absent a clear written release. This has always been a risk in assignments; the new “purchaser” definition and “parties” language don’t reduce it – if anything, they may embolden builders.

4. Misrepresentations, side-agreements and assignment terms
   If the assignor has promised things to the builder (for example, in builder’s consent to assignment) or made representations that turn out to be false, the assignor could face contractual or regulatory exposure even after the assignee takes over.

Again: none of this is a guarantee of outcome. But if you’re the original purchaser trying to exit via assignment, you should proceed assuming liability might still follow you unless you structure it carefully.

Until then, assume the risk is real, and structure your assignments accordingly.

Thinking about assigning your pre-construction in Ontario?

If you’re considering assigning a pre-construction condo, townhouse, or freehold home anywhere in Ontario, or analyzing your rights to exit a pre-construction purchase:

• Email info@wolflaw.ca

• Or call Wolf Law at 905-739-0616 or 1-833-963-9653

Wolf Law (based in Mississauga and serving clients across the GTA and all of Ontario), regularly advises on:

• Pre-construction assignments

• Analyzing your rights to get out of pre-construction purchases

• New-home and Tarion issues

• Real estate litigation when deals go sideways