What is Interim Occupancy?

Interim Occupancy is the period between the day you get your keys and have access to the property to live in, and the final closing. Your lawyer will receive a document known as the “Interim Statement of Adjustments” when your interim occupancy date has been confirmed with the developer or vendor. When your lawyer receives this document, you are able to move into your building even though construction may not be complete on all of the units in the building. The lower floors will receive interim occupancy first as the builder works their way up to complete construction on each suite and common spaces in the building. Majority of the time, there are hundreds of buyers, so this occupancy period takes time and coordination to be done properly. It is important to note that during the interim occupancy phase, you do not own the unit yet. Ownership will be transferred to you when the condo has been registered with the municipality and this can only be done when all construction on the building is complete.

The timeframe of your interim occupancy varies from one condo development to the next, meaning that your interim occupancy period could last anywhere from a few weeks to a few years. The average time to register is usually 3-6 months.  Typically, if you are on the lower floors of a building, you will qualify for an earlier occupancy date, therefore you will have a longer interim occupancy period. It is important to buy from a reputable developer to ensure a project is completed and registered in less time.


What is the Difference Between Interim Occupancy and Final Closing?

The biggest difference between interim occupancy and the final closing date is the fee that you will pay and where it is going. During interim occupancy you are paying an occupancy fee to the developer, because you haven’t yet taken possession of the property but the builder is allowing you to occupy it. When the construction of the building is completed and registered with the Land Registry office, the final closing date will usually be the same for all units regardless of floor level. After the final closing, your interim occupancy fees cease, and your mortgage payments are now in effect. Therefore, during this temporary stage, you’re not paying off your mortgage principal.

An interim occupancy fee consists of the interest only portion of what your mortgage would be, estimated condo fees and estimated taxes. The missing component between an interim occupancy fee and a mortgage is the principle portion of the mortgage payment. This is not required as you don’t have a mortgage yet.

What do Interim Occupancy Fees Cover?

During your interim occupancy period you will have to pay the developer an interim occupancy fee. You will not have to pay a mortgage fee during your interim occupancy period since you do not legally own the property yet. Your interim occupancy fee is typically lower than what your mortgage would cost per month because you’re not paying the principle portion of the payment. Whether you move in on your interim occupancy date or not, you will still have to pay these fees until the final closing.

According to Condominium Authority of Ontario’s website, the monthly interim fee is based on three things:

  • interest (calculated on a monthly basis) on the unpaid balance of the purchase price at the prescribed interest rate
  • estimated monthly municipal taxes for the unit
  • projected common expense fees for the unit.

Developers are not be able to make a profit through these interim occupancy fees, which is an incentive to make sure interim occupancy is as short as possible. The Condominium Authority of Ontario also states that “Once the interim occupancy period ends and ownership of the unit is transferred, you may be owed money if your builder collected more money for property tax than the actual property tax amount. Alternatively, you may owe your builder money if they collected less property tax than the actual amount that was charged by the municipality.”


Can I Rent my Unit During Interim Occupancy?

In order to rent your unit during interim occupancy you need to get permission from the builder in writing because technically, the builder is the owner of your unit until the final closing date. Permission to rent can be included in your Agreement of Purchase and Sale and it is better to clarify your intentions to the builder long before construction has begun to avoid legal complications. If you get the go ahead, and plan on leasing during interim occupancy it is important to note that you can’t apply for the HST rebate as a principal resident but must do so as an investor. Refer to this article to understand more about the difference between HST rebate in Ontario for end users, vs. HST rebate in Ontario for Investors.


Tarion Warranties

Your one, two- and seven-year warranties begin as soon as you are granted occupancy of your unit meaning the start date of your interim occupancy. If there are any issues with your unit, it is your responsibility to submit the appropriate warranty form to Tarion. In the disclosure document that is attached to your purchase agreement, you will find common element boundaries and responsibilities for repair and maintenance. Tarion has a 30-day period that you can fill out your first warranty.

Book a call with us today if you are thinking about buying pre-construction.