When the builder goes broke: how to check a project's health before you deposit

In July, The Vic Towns — a 147-unit townhouse project at 1682 Victoria Park Avenue — was placed under creditor protection, with 65 units still unsold. Court filings describe a project that hadn't closed a sale since March 2026, with a secured lender advancing millions just to finish units, address deficiencies in the 82 townhomes already sold, and keep property taxes paid.

If you're shopping pre-construction in this market, that's not a scare story — it's a checklist. Projects rarely fail overnight. They fail in public, slowly, and most of the signals are readable before you sign.

What creditor protection means for buyers

When a developer files under the CCAA (or a lender pushes it into receivership), the project's fate moves to a court-supervised process. Depending on how it unfolds, existing purchasers can face long delays, renegotiated closings, or terminated agreements — and buyers of unsold inventory may see units dumped in bulk sales at prices that reset the building's value. Deposits held in trust have protections, and Tarion coverage caps what you can recover beyond them, but nobody walks away whole from a stalled project. The best outcome is the one where you saw it coming.

The signals that show up before the filing

• Sales velocity you can sense-check. A project marketing "final release!" for two years is telling you something. In the Vic Towns case, dozens of finished townhomes sat unsold while carrying costs compounded.
• A stalled permit trail. Active construction leaves a steady drip of permits and inspections. A project whose permit history goes quiet for months — no new permits, nothing closing — has usually stopped paying trades.
• The neighbourhood's unsold pile. One struggling project on a corridor is bad luck; five is a market condition. Use nearby developments to see how much approved-but-unbuilt or built-but-unsold inventory surrounds the site — the condo glut isn't evenly distributed.
• The developer's other addresses. A builder's financial stress rarely stays confined to one site. Check the record on their completed buildings — chronic orders and violations on past projects tell you how they finish.

A deposit cheque is an unsecured bet on a builder finishing a building. Read the builder's public record with the same care you'd read the floor plan.

Before you deposit

Pull the permit history on the site, scan nearby developments for competing inventory, and check the builder's completed projects for orders. Then monitor the address — if the permit trail stalls or something new files, you'll hear about it while your deposit decision is still reversible.