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Understanding Interim Occupancy
In Ontario, many purchasers of new condominiums may be surprised to find out that their closing is a two-step process, one for interim occupancy and one for final closing. Surprised if it’s their first time buying a new condominium from a developer and did not get a lawyer to review their agreement of purchase and sale.
Typically, a condominium project will first have what is called an interim occupancy. During the interim occupancy period, the purchaser must “occupy” the unit and pay the developer a monthly amount comprised of the monthly common expense, interest on the deferred purchase price and an estimate of the apportioned realty taxes (apportioned monthly). Occupancy will take place as soon as the municipal authority issues the developer permission to begin occupancy. The occupancy fees paid to the developer during the occupancy period are not credited to the final purchase and the only way to avoid paying interest on the deferred amount of the purchase price is by electing to pay the full amount of the purchase price on interim occupancy. It is important to note that a mortgage cannot be secured on the occupancy date; therefore, a purchaser wishing to pay off the balance of the purchase price must do so without a mortgage secured on that condominium unit.
The final closing will occur once the developer is ready to register the condominium declaration and transfer title to the individual unit purchasers. This date can occur at any time after interim occupancy. It is not uncommon for the interim occupancy to be anywhere from as short three (3) months to as long as eighteen (18) months, all depending on the prescribed Ontario New Home Warranty Plan’s schedule of occupancy and final closing provided to the purchaser upon signing the agreement of purchase and sale. Only upon final closing will a purchaser be able to secure a mortgage on title because that is when title will be delivered to the purchaser. Purchasers seeking to rent their condominium unit after interim closing can do so, but should read my previous post with respect to the implications of renting a condominium unit.
About the Author
Maxim Zavet is a real estate lawyer in the city of Toronto. His practice is primarily focused in various residential and commercial real estate transactions for individuals, corporations and developers. Maxim had worked at some of Toronto's premier real estate law firms before becoming a founder and partner at PLZ Law.-
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