Interim Occupancy in Ontario New Condos: Moving In Before You Own

You signed the agreement, the building is finally ready for you to move in — but your lawyer tells you the "final closing" is still months away. Welcome to interim occupancy: the period unique to new Ontario condos where you take possession of your unit before the condominium corporation is legally registered.

For many buyers, this is one of the most confusing parts of buying pre-construction. You are living in the unit, but you do not yet legally own it, you are not making mortgage payments, and you are paying a fee to the builder every month. This article explains how the interim occupancy period works, what your rights are, and what to watch for.

Why interim occupancy exists

When a condo building is complete enough for people to move in, individual units are often finished before the entire building and common elements are ready for the formal legal process of condo registration. Under Ontario's Condominium Act, a condominium corporation does not come into existence until the developer registers the condominium description and declaration with the land registry office.

Until that registration happens, the individual units are not yet separate legal parcels of land that can be conveyed and mortgaged. So the developer lets buyers move in — under an occupancy agreement — while registration is being completed.

The gap between your occupancy date and your final closing (registration) can range from a few weeks to more than a year, depending on the building.

What you pay during interim occupancy

During the interim occupancy period, you pay the builder a monthly occupancy fee. This is not a rent payment, but it is calculated in a similar way. Under the Condominium Act, the occupancy fee has three components as of writing — verify the current formula with your lawyer:

1. Interest on the unpaid purchase price — calculated at a rate set by the Act on the difference between the total purchase price and your deposit.
2. An amount equal to the estimated realty taxes for your unit for the month.
3. A contribution toward common expenses (maintenance fees) for the unit.

You are not paying down principal during this period. Your mortgage has not yet been advanced because there is nothing to register it against. This is a key financial difference from final closing — every dollar of your occupancy fee is an expense, not an investment in equity.

How the occupancy fee compares to your eventual mortgage payment

Many buyers are surprised to find the occupancy fee is lower than their eventual mortgage payment. That is because the interest component is calculated only on the unpaid balance (price minus deposit), often at a rate specified in the Act. Once final closing occurs, your mortgage kicks in and your actual debt service begins.

Your rights during interim occupancy

As an occupant (not yet an owner), your position differs from that of a registered owner in some important ways:

• You cannot sell the unit until after final closing — there is no title to transfer.
• You cannot register a mortgage against the unit.
• You have no vote in condo corporation decisions — the corporation does not yet exist, or you are not yet an owner.
• You are entitled to quiet enjoyment of your unit under the occupancy agreement.
• The builder remains responsible for deficiencies and warranty obligations under Tarion/HCRA coverage.

The occupancy agreement should mirror the agreement of purchase and sale in terms of the unit you are occupying. If the builder tries to change your unit during the occupancy phase, you have grounds to object.

Common issues during interim occupancy

Builder delays in obtaining registration

Sometimes registration takes longer than expected because of issues with the municipality, utilities, or the building's common elements. While you wait, you keep paying occupancy fees. If the delay is caused by the builder, delayed closing compensation provisions under the Condominium Act may apply — see the article in this series specifically about that remedy.

Common elements not being ready

During early occupancy phases in a large building, amenities like the gym, party room, or roof terrace may not be open yet. The disclosure statement should indicate when common elements will be available, but delays are common. Document these issues in writing.

Deficiencies in your unit

Inspect your unit carefully on the occupancy date and complete a pre-delivery inspection (PDI) form. This is your formal record of items that need to be fixed. Items not noted on the PDI can be harder to claim under warranty later. Keep a copy of every form you sign.

Builder amendments after occupancy

Even after you move in, the builder may make changes to the common elements or other units in the building that affect the overall condo. Review any amendment notices you receive carefully and, if significant, get legal advice on whether the amendment triggers a new rescission right.

Interim occupancy and your deposit

During interim occupancy, your deposit remains protected under the deposit trust rules and Tarion/HCRA warranty scheme. Final closing is when title transfers, the mortgage is advanced, and the builder receives the balance of the purchase price. If the project collapses before registration — a rare but real risk — the deposit protection scheme is your backstop.

Frequently asked questions