Am I screwed if my pre-construction condo turns into a rental tower?

Dear Real Estate Urban Diplomat,

My girlfriend and I are thinking about buying a pre-construction condo. As we were leaving the info seminar, we overheard someone saying that the condo next door was cancelled midway through construction and turned into a rental tower instead. What’s at risk if our developer has a similar change of heart after we buy in?

—Rental Guidance Advised, King West

When condo developers pull a rental switcheroo, they typically do so well before any sales are finalized. But that’s not always the case. Consider last year’s King West fiasco, when a developer shifted gears after selling 181 units; by law, early buyers got their deposits back, with interest (calculated according to the Bank of Canada’s measly overnight rate), but were suddenly scanning listings again. It’s up to you whether the perks—discounted prices, unit upgrades—outweigh the potential pitfalls of buying early. If your pre-construction condo does indeed go the way of landlords and leases, though, don’t fret: there will always be another new, nearly identical building on the rise, more than happy to take your money.

Send your questions to the Urban Diplomat at urbandiplomat@torontolife.com