What are occupancy fees on a new condo in Ontario and are they a closing cost?

Occupancy fees are a unique cost associated with purchasing a new condominium in Ontario. After a new condo unit is substantially completed and the builder allows you to move in, but before the condominium corporation is formally registered and title can be transferred to you, you enter a period called interim occupancy. During this period, you occupy the unit but you do not yet legally own it.

During interim occupancy, you pay the builder a monthly occupancy fee. The fee cannot exceed the equivalent of mortgage interest on the unpaid portion of the purchase price, plus any estimated monthly condominium maintenance fees, plus an amount for municipal taxes attributable to the unit. You do not pay land transfer tax yet — that happens when the condo is registered and title is transferred to you, which is the "real" closing.

Occupancy periods can last anywhere from a few months to well over a year depending on how long it takes the builder to complete the project and register the condominium. The total occupancy fees paid during this period can be a significant unplanned expense for buyers who did not budget for them. Review your purchase agreement carefully with a lawyer before signing.