Buying Pre-Construction Condo in Ontario: Interim Occupancy vs Final Closing

Buying a pre-construction condo may seem like a simple process at first. You might think that once your condo is ready, you move in, and that’s it, the deal’s done! But it doesn’t work like that. The process is like a rollercoaster ride: you get a combination of excitement, anticipation, and a few unexpected twists.

Between you and full ownership of your dream home in Toronto or other cities, are two major milestones: interim occupancy and final closing. They might sound similar, but they’re actually two very different steps in your homeownership process. Understanding how they work and what they mean for your wallet can help you avoid surprises down the road.

In this post, we’ll walk you through these two stages in plain English with simple words, explain why they matter, and show you what to expect along the way. So, let’s clear the air on occupancy vs. closing once and for all.

Key Differences Between Interim Occupancy & Final Closing 

If you don’t have time to go through the entire article to learn the difference between interim occupancy and closing, here is a comparison table that breaks down all the details. The process is essentially the same across different regions, whether it’s Mississauga or other cities.

What is the Interim Occupancy Meaning?

To explain the concept in simple terms, imagine this realistic scenario: the construction phase of your condo is over, and the developer gives you the green light to move in. Technically, you’re now occupying your unit, but not as the owner! From a legal perspective, there’s still one more step before you become the official owner.

You’re now in the interim occupancy phase. This means you’re allowed to move into your unit but must wait until the building is registered, which will make you the official owner. Who’s the owner during this stage? The builder! You get to live in your own future condo pretty much like a tenant.

Read: What’s Interim Occupancy?

Who Does This Apply To?

Interim occupancy, typically, applies to pre-construction buyers of units within condominiums or condo townhomes that have been newly built. This stage doesn’t apply to freehold properties, like single-family homes or freehold townhomes.

Why Does Interim Occupancy Happen?

AT the end of the preconstruction condo timeline, when a building is finished, the builder will apply for something called an occupancy permit, which means the units are safe to live in. But here’s the thing—legal processes are slow and can take months, or even more than a year. Registering the entire building is no exception.

So, instead of waiting for these slow legal steps to wrap up, you get to move in and start enjoying your new home. It’s a win-win scenario for both parties: you don’t have to wait to take possession, and the builder can begin fulfilling contracts and receiving payments.

What Are Interim Occupancy Fees?

During this stage, you have to pay a monthly interim occupancy fee, aka phantom rent. Why phantom? Simply because it’s not going toward your mortgage. The fee covers

• Interest on the unpaid balance of the purchase price (based on a rate set by the builder’s lender)
• The estimated costs of maintaining the common areas of the building
• A portion of the property taxes

Quick Tip: You won’t be making mortgage payments yet, but these interim fees can add up. It’s smart to budget for this period in advance.

How Long Does Interim Occupancy Last?

The short answer is it depends. It’s like a spectrum; it can be a few months (2 or 3) or can be longer, up to a year or a little bit more, especially in large projects where the building is registered in phases (some agreements may have a limit of 24 to 36 months).

Example: Interim Occupancy Fee Breakdown

Let’s say your pre-construction condo price is $600,000, and you’ve already paid $120,000 in deposits. Here’s a sample monthly breakdown during interim occupancy:

• Interest on $480,000 balance (let’s say at 5%) = ~$2,000
• Maintenance fees = $400
• Estimated property taxes = $300
• Total Monthly Interim Occupancy Fee: ~$2,700

These aren’t fixed numbers, but they give you an idea of what to expect.

Your Main Responsibility During Interim Occupancy

Each month, you’ll be responsible for paying your interim occupancy fees, that blend of interest, estimated condo fees, and property taxes we broke down earlier. Since you’re not making mortgage payments yet, this fee is what keeps things moving until final closing.

What You Can’t Do (Yet)

• You can’t get a mortgage:  Lenders won’t release mortgage funds until the building is registered, and closing can officially take place.
• You can’t sell or rent the unit—unless the builder agrees: During this stage, the builder holds title. So, if you were thinking of flipping or leasing the unit, you’ll need written permission.

What You Can Do

• Live in the unit and treat it as your own (within reason).
• Decorate or furnish it as you’d like—but no major renovations.
• Start prepping for closing. It’s a good time to line up your mortgage approval, talk to your lawyer, and make sure your finances are in shape.

Pro Tip: Use this time wisely! Review your purchase documents, confirm your closing costs, and stay in touch with your builder and lawyer so you’re not caught off guard when final closing approaches.

What is Final Closing?

Here’s where things get real. Final closing is exactly the stage you’ve been dreaming of from the beginning; it’s the moment your homeownership becomes official. At final closing, the building is registered as a condominium, and your name goes on the title, the final piece of the puzzle!

In short, final closing = legal ownership.

What Happens at Final Closing?

A lot happens behind the scenes, which can be summarized in these steps:

• Registration of the building with the city as a legal condominium
• Release of mortgage funds (if financing applies)
• Final balance of purchase price and closing costs
• Title registration with the Land Registry Office under your name
• Full legal control of the unit (rental, resale, or refinancing options possible)

What Are the Closing Costs?

Besides the remaining purchase price, make sure to budget for:

• Land transfer tax (provincial or municipal)
• Legal fees and disbursements
• Development charges and levies
• Tarion Warranty enrollment fees
• Adjustments (condo fees, property taxes, utility setup costs)

Closing costs can be around 1.5% to 5% of the purchase price, depending on a few things, like how much the condo costs, whether it’s in Toronto or another city, and whether you’re a first-time buyer or not. These little details can make a big difference!

Pro Tip: Don’t forget to factor in these fees with the help of your lawyer from the start, as they can quickly add up to several thousand dollars.

What Happens During Final Closing?

When you reach this step, things start to move quickly, so it’s a good idea to be ready. Typically, your lawyer will take care of most of the behind-the-scenes work, but there are a few key things you’ll need to do.

Final Closing Date is Confirmed

Your lawyer will contact you to confirm the official closing day. At this point, notify your lender; this way, they’ll initiate the process to prepare and release your mortgage funds.

Review Key Closing Documents

There are two important documents that you’ll receive:

• Final Statement of Adjustments (FSA): A detailed breakdown of your purchase price, deposits already paid, and adjustments like condo fees, property taxes, or prepaid expenses.
• Trust Ledger Statement: This includes a series of vital stats and numbers: how much money is coming in, where it’s going, and what’s left for you to pay. And, how much certified funds to bring to your lawyer?

Meeting with Your Lawyer (1–2 Days Before Closing)

Before the big day, you’ll have a meeting to sign off on everything and hand over final payments. Bring the following:

• Three pieces of valid ID
• Certified cheque or bank draft for your closing costs
• Post-dated cheque for monthly condo fees
• Void cheque for setting up pre-authorized payments

Pro Tip: Double-check that the name on your cheques matches your legal ID; your lawyer can’t proceed without it.

Closing Day: It’s Official!

On closing day, your lawyer:

• Transfers your mortgage funds and final payments to the builder’s lawyer
• Completes all the necessary paperwork
• Registers your ownership with Ontario’s Land Registry

Once these steps are complete, the unit is officially yours! You’ll receive a confirmation call or email, and then you can celebrate, you’re a condo owner for real this time!

After Closing

You’ll receive a final reporting package from your lawyer. This includes:

• Your deed (official proof of ownership)
• A copy of your mortgage
• Receipts, statements, and all supporting legal documents

Store these somewhere safe; they’re important documents and will come in handy if you refinance, sell, or need to prove ownership in the future.

Do I Have to Pay These Fees?

Short answer: Yes. 

You’ll be responsible for interim occupancy fees during your interim period and closing fees when you become the official owner of the condo unit. If you don’t pay your interim occupancy fees or closing fees, you could run into some real trouble.

First off, not paying your interim occupancy fees could lead to penalties or even delays in your final closing—no one wants that! The builder might take legal action to recover the unpaid fees, which can harm your credit score and make things a whole lot more complicated.

As for closing costs, the consequences are even more serious—it’s like shooting yourself in the foot. If you don’t settle them, you can’t officially become the owner of your condo! In some cases, unpaid fees can also affect your mortgage or financing.

So, staying on top of these payments is key to avoiding headaches and keeping the process smooth sailing.

Pro Tip: Both interim occupancy fees and closing fees are essential to factor into your budget, so you aren’t caught off guard by additional costs.

Can I Rent or Sell the Unit During Interim Occupancy?

Well, this one’s a bit of a grey area.

Generally speaking, you’re not allowed to rent or sell the unit during interim occupancy (the correct term here is assigning, since the condo isn’t officially yours yet). However, if the builder gives you written permission, it might be possible. 

Why? Because the building hasn’t been registered yet, and from a legal point of view, the builder still owns it—you don’t call the shots just yet!

So if you were planning to lease the unit out or flip it before final closing:

• Check your Agreement of Purchase and Sale
• Talk to your lawyer
• Request written permission from the builder

Pro Tip: If you’re thinking about renting or assigning your unit, don’t keep it to yourself—chat with your VIP real estate agent or lawyer early on. They’ll walk you through your options and help you avoid any contract slip-ups. A quick conversation now can save you a ton of stress later!

Bottom Line

Understanding the difference between occupancy vs closing is a big deal when it comes to buying a pre-construction condo in Ontario. Interim occupancy lets you move in early, but here’s the catch—you don’t officially own the unit yet. You’re more like a tenant in your soon-to-be home. Final closing is the real finish line; when ownership is transferred, and you can finally call the place yours, with all the rights that come with it.

The real estate world can feel a bit overwhelming; there’s a lot of fine print, legal jargon, and industry lingo to sort through, but with the right knowledge and the right team, you can make it through with confidence. If you’re ready to take the next step or have any questions about the process, don’t hesitate to contact us at Platinum Condo Deals today.