Instead of purchasing a pre-existing single-detached home or a condo, you may elect to buy a new condo, or a pre-construction condo. Provided you do this in Ontario, Canada, the purchase closing process is a little bit different from what I have laid out in my purchase closing guide. The most significant difference is that buying a new condo involves a two-step process, namely interim occupancy and final closing.
Interim Occupancy
On your Agreement of Purchase and Sale (APS) that you have signed with the builder/developer, there should be a document that shows the interim occupancy date. On this date, you will be able to move into your unit even though the condo is not fully complete, i.e. construction of all units and the common elements, or areas of the condo except for the units, is incomplete. However, if you want to wait until construction is fully completed, then you may do so.
Kindly be advised that your municipality must inspect the condo before you move into your unit. After this inspection, your municipality will issue an occupancy certificate/permit, which is mandatory before you can move in.
How Long is Occupancy?
Interim occupancy is generally between 3 months to 18 months (a year and half) in length.
Please note that the above timeline is affected by how far along the construction has progressed when you began occupying the unit.
Because this is a wide gap, make sure you follow up with your builder routinely after occupancy begins so that you know when final closing approaches.
Final Closing
Your APS should also show the final closing date, which is when you will officially and legally be the owner of the condo unit. The construction of the condo in its entirety will also be complete.
This is also the stage where you must finalize your financing, e.g. your mortgage deal with your bank.
And like any other purchase closings in Ontario, you must go through this final closing process with a lawyer representing you.
Interim Occupancy Fees
Now, the above sounds well and good, but there is a catch – you must pay monthly occupancy fees until you arrive at the final closing date.
This fee is a combination of 3 components: one, condo fees, two, monthly property taxes, and three, interest on the remaining balance of the purchase price.
Condo fees, as I explained in my sale guide, are fees required to cover maintenance and other expenses used to take care of the condo – you will keep paying these fees after final closing.
You are also required to pay interest on the remaining purchase balance that your builder will otherwise pay to the bank for their mortgage/loan.
You can simply think of occupancy fees as the rent you’re paying the builder until the unit officially becomes yours.
Kindly keep in mind that these fees must be paid by law to the builder regardless of whether you move into your unit during occupancy or not.
Sources Used for Research
Sotheby’s International Realty Canada, Brokerage: https://condoinvestments.ca/interim-and-final-closing-all-you-need-to-know/
Tarion: https://www.tarion.com/media/condo-buyers-guide-interim-occupancy