Purchasing a presale condo can be an exciting opportunity, but before you sign on the dotted line, there’s a key detail you need to look out for—the price index clause.

What is a Price Index Clause?

Some presale contracts contain a price index clause that may state something like:
"If the building construction pricing index increases by more than 4%, the developer reserves the right to increase the price by the amount over 4%."

In simple terms, this means that if the cost of construction materials rises beyond a certain threshold, the **buyer—not the developer—**could be on the hook for paying the difference.

Why is This Clause a Red Flag?

Developers include this clause to protect themselves from unexpected cost increases during construction. However, this shifts the financial risk onto buyers, making your final purchase price uncertain. If material costs spike, you could be forced to pay thousands more than you originally expected.

What Should You Do?

• Review the contract carefully – If you see a price index clause, don’t ignore it.
• Have your realtor cross it out – A skilled realtor will negotiate to remove this clause and secure a fixed price for you.
• Walk away if necessary – If the developer refuses to remove the clause, consider finding another project that offers more price security.

Final Thoughts

A presale condo can be a great investment, but only if you understand the contract and protect yourself from unexpected costs. Always work with a knowledgeable realtor who can guide you through the process and ensure you’re making a smart, risk-free investment.

Thinking about buying a presale condo? Let’s talk! Contact me today to ensure you get the best deal possible.