How presale deposits work in BC

A presale is a contract to buy a home that doesn't exist yet. The building will complete in 18 months to 4 years. In the meantime the developer needs capital to finish construction , and a way to prove to their bank that real buyers are locked in. That's the deposit.

In British Columbia, presale deposits are governed by the Real Estate Development Marketing Act (REDMA) and the Real Estate Services Act. Together those laws require that every cent of deposit money be held in trust , with the developer's lawyer or a licensed real estate brokerage , until the building completes. The developer cannot spend it. If the project fails or you lawfully walk away, the trust is the safety net.

The total deposit is split into multiple cheques because paying 20% on day one is a cash-flow impossibility for most buyers. Splitting it lets you time the later payments against bonuses, RRSP maturity, or a home sale. The schedule itself is laid out in the disclosure statement and contract of purchase and sale, and is often negotiable , a good realtor can usually push for a longer runway late in a sales phase when the developer is chasing a financing trigger.

Typical deposit structures (5%, 10%, 15%, 20%)

Developers cluster around a handful of common structures. Lower-total-deposit projects are easier to buy into but often reflect a developer who needs to move product; higher-total-deposit projects signal confidence and financing strength. Neither is automatically better , what matters is matching the schedule to your cash availability.

The 5% + 5% + 5% pattern (15% total) is the Fraser Valley default. If a project is asking for more than 20% or front-loading the first installment above 10%, ask why. Either the developer is trying to compensate for weak financing or the project is in a market segment (luxury, pre-construction masterplan) where larger deposits signal qualified buyers.

When deposits are due

Every BC presale contract includes a rescission period , by law, a 7-day cooling-off window from the date you receive the disclosure statement and contract, during which you can walk away without penalty. During rescission, the deposit is held but refundable.

After rescission, the first cheque becomes "firm." From that point the common schedule looks like this:

• Installment 1 (5%): within 7 days of contract acceptance, payable by bank draft or certified cheque. Non-refundable after rescission.
• Installment 2 (5%): at 6 months after signing. Developer sends a reminder about 30 days before; your lawyer or realtor follows up.
• Installment 3 (5%): at 12 months after signing (for 15% total deposits). Some projects stretch this to 18 months , always check.
• Installment 4 (5%, if 20% total): at 18 months after signing, or at a construction milestone (e.g. "topping off" of the structure).
• Completion: 18-48 months after signing, when the building finishes and the remaining balance (plus GST, property transfer tax, legal) is due.

Miss a deposit installment by even a day and you're in technical default. The developer is required to notify you, typically giving 7-14 days to cure, but they can terminate the contract and keep everything you've paid to date if you don't. Put every deposit date in your calendar the day you sign, with a 30-day warning.

Is deposit the same as down payment?

Not quite , but they overlap. Here's the clean distinction:

• Deposit: money paid to the developer during construction, held in trust. It is locked in until completion.
• Down payment: the total equity you contribute at closing, reducing the mortgage you need. In Canada, a 20% down payment avoids CMHC mortgage insurance.

Every dollar of your deposit counts toward your down payment. If your presale is $800,000 and you've paid $120,000 in deposits (15%), you need $40,000 more cash at completion to hit a 20% down payment ($160,000 total) and skip CMHC insurance. The lender's underwriting at completion verifies your full down-payment source , including the deposits already paid , so keep every bank draft receipt and trust-deposit letter. That paper trail becomes required reading the month before you close.

Can gifted funds be used?

Yes. Gifted funds from an immediate family member (parent, grandparent, sibling, child, spouse) are acceptable for both deposit and down-payment purposes in Canada. The rules:

• Signed gift letter. The gifter provides a letter stating the amount, the relationship, and that the funds are a non-refundable gift (not a loan). Your mortgage broker will have a template.
• Source of funds proof. The gifter must show 90 days of bank-statement history for the account the gift came from. Anti-money-laundering rules require this paper trail.
• Canadian bank deposit. Gift funds coming from outside Canada face extra scrutiny , expect additional documentation and 2-4 extra weeks to clear AML checks.
• It must be in your account before the deposit cheque clears. You cannot wire the gift the same day you issue the bank draft , lenders will flag it. Give yourself at least 3 business days of settling time.

Gifts from non-family (friends, employers, business partners) are treated with much more skepticism and may be refused outright by lenders. If that's your situation, talk to a mortgage broker before you sign anything.

What happens if you can't complete?

This is the one section every buyer should read twice. "Can't complete" means you signed a binding contract, paid a deposit, and , 2 to 4 years later , you don't have the mortgage, the cash, or the willingness to close. It happens, usually because:

• Mortgage rates moved, your qualification dropped, and you no longer qualify for the loan you thought you'd have.
• Appraisal at completion comes in below purchase price, so the bank lends less than you expected.
• Life changed , job loss, divorce, illness, new job out of province.
• Construction finished materially later or differently than what you were sold.

The default outcome: you forfeit 100% of the deposit. On a $120,000 deposit that is a $120,000 loss. The developer keeps the money. If the market dropped below your purchase price and the developer resells for less, they can also sue you for the shortfall , the difference between your contract price and the resale price, plus legal costs. This is not theoretical; there were well-reported examples of this from Metro Vancouver condos in 2018-2020.

Two legal exits exist. Assignment means selling your presale contract to another buyer before completion , most contracts require developer consent and charge an assignment fee ($5,000-$25,000 typical) plus GST on any profit. Rescission rights let you walk away inside the 7-day cooling-off window with full refund. After that window, without the developer's blessing, there is no clean way out.

Interest earned on deposits

Deposits held in trust earn interest. On a $120,000 deposit sitting at ~3% for 18 months, that's roughly $5,400 , a number most buyers have never thought to ask about.

Who gets it depends on the purchase agreement. Three patterns show up in Fraser Valley:

• Buyer keeps the interest , rarest, usually only in buyer-friendly markets or negotiated contracts.
• Developer keeps the interest , most common. Buried in the fine print under "Deposit Administration" or similar.
• Interest credited to the purchase price , occasionally offered as an incentive, reducing your final balance at closing.

Read your specific contract. If the developer keeps the interest, use it as a bargaining chip for a parking upgrade, appliance package, or small price concession. On $120,000 over 18 months, this is real money.

Deposit risks buyers ignore

Six recurring risks that catch Fraser Valley presale buyers off guard. I see at least two of these on every client file.

1. Interest-rate drift. You qualify today at 4.8%; you complete in 3 years at 6.2%. Your qualifying amount drops ~15%. Pre-approve at a stress-test rate above current, not below.
2. Appraisal gaps. If the market softens between signing and completion, the lender's appraisal may come in lower and you cover the gap in cash. Budget a 5-10% contingency.
3. Developer insolvency. Rare in BC thanks to REDMA , deposits in trust are protected , but 2-3 years of capital locked up on a dead project is still painful.
4. Assignment clause restrictions. Some contracts forbid assignment until the building is substantially complete. If you need an exit, that restriction is the difference between a clean sale and a catastrophic default.
5. Rescission-period gotchas. The 7 days start from receipt of a fully signed disclosure statement and contract. Get dates in writing , developer delays can make you think you're inside the window when you're not.

How much cash should you really keep after deposit?

Most buyers drain their savings to cover the deposit. That's a mistake. Between signing and completion you will need cash for:

• Subsequent deposit installments (if you front-ended the first cheque and haven't saved for #2 and #3).
• GST at completion , 5% on the purchase price, not rebatable above $450,000 on most Fraser Valley presales. See the GST rebate guide for the exact math on your purchase.
• Property Transfer Tax (PTT). First-time buyers may be exempt below $500,000 and partially exempt to $835,000 (2024 thresholds, verify at completion). Above that, budget 1-2% of purchase price.
• Legal fees, title insurance, moving, appliances, window coverings. Budget $5,000-$10,000 for the soft costs nobody talks about until the bill arrives.
• 3-6 months of mortgage, strata, and living expenses as a reserve. Lenders like to see this; you will like to have it if anything changes.

Rule of thumb: after paying your first deposit installment, keep at minimum 3x the next installment in liquid cash, plus a 6-month living-expense buffer. If that math doesn't work, the presale you're buying is slightly too expensive for you today. That's a hard conversation worth having before you sign.

Examples using Surrey / Langley / Fraser Valley prices

Five realistic presale scenarios on projects most Fraser Valley buyers are looking at today. Prices are illustrative , actual phase pricing moves month-to-month; grab the Watchlist for current.

• Park George Surrey , one-bed at ~$550,000, 15% deposit: $27,500 at signing + $27,500 at 6 months + $27,500 at 12 months = $82,500 total deposit. Balance at completion: ~$495,000 including GST. Cash-at-close buffer (soft costs + GST + PTT): budget $35,000-$40,000 on top.
• Georgetown Surrey , two-bed at ~$750,000, 15% deposit: $37,500 x 3 installments = $112,500 total deposit. Completion cash (GST $37,500 + PTT + legal): budget $55,000.
• Heath West Langley townhome at ~$850,000, 20% deposit: $42,500 x 4 installments = $170,000 total deposit. More front-loaded cash but stronger project security. Completion cash: budget $60,000 for GST + PTT + legal.
• Griffon Langley townhome at "GST-included" ~$899,000, 15% deposit: $44,950 x 3 = $134,850 deposit. GST already baked in (for qualifying owner-occupiers), so completion cash is lighter , PTT + legal, roughly $20,000-$25,000.

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Alex Dunbar Personal Real Estate Corporation

REAL Broker BC Ltd.  |  Living in the Lower Mainland

I help Fraser Valley buyers pick the right neighbourhood for their budget, commute, and family. Whether you're weighing neighbourhoods, relocating to BC, or buying your first home, I'll give you the honest numbers and a clear plan.

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Pricing ranges, commute estimates, and project details are as of April 2026 and will change. Always verify specifics with the sales centre, developer, or city before committing. This article is for informational purposes and does not constitute financial or legal advice.