Toronto real estate lawyer Mark Morris has raised a red flag over growing numbers of pre-construction buyers who are gambling on the ability to flip their purchase agreements before closing their deals in the current hot real estate market.

And, if those buyers are forced to close their deals, they may not be able to actually afford the homes they’ve bought and unable to close their deals.

In emails and phone calls last week, Morris told me that he and a number of lawyer colleagues are seeing this growing problem in the field of new-build housing.

“In the past,” he says, “when I asked people what they intended to do with a property, nine times out of 10 they would indicate that they were purchasing a property to rent it out or use it for themselves.”

For the past six months, however, “almost every single person, when asked, admits that they are purchasing these units solely for assignment (selling the contract to another party before closing) purposes.”

In his real estate practice, Morris represents many purchasers of pre-construction units. He finds it disturbing that a significant number of the people who consult him would not be able to afford the homes they are buying if they were forced to close the transactions.

In most builder contracts, buyers are required to provide proof to the builder that they would qualify to obtain mortgages so they can close their purchases. This gives the builder and its construction lender the confidence that the buyers will be able to close when the time comes.

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