Closing Costs on a New Condo in Ontario: HST, Levies, Adjustments

You signed a pre-construction agreement years ago, and closing is getting closer. The price you remember is rarely the only amount you will need, and the extra charges can be a surprise if you have not planned for them.

This article explains how to think about those charges in Ontario, covers the costs tied to interim occupancy, deposits and delays, and lists what to ask your lawyer before closing. Items such as HST, development levies and utility connection fees depend heavily on your agreement, so they are worth confirming with your lawyer or accountant.

Why the closing number is more than the price

On a new condo, the amount due at closing is usually the balance of the price adjusted up or down for several items. Common examples buyers ask about are HST, development levies and utility connection or meter fees. Whether each one applies to you, who pays it and how it is calculated depends on the wording of your purchase agreement and on your own circumstances.

Because those items vary so much, do not rely on a general figure from a friend or a website. Ask for a written statement of adjustments from the builder's lawyer, and have your own lawyer or accountant explain each line before you close.

Interim occupancy: paying before the building is registered

Many buyers move in before the condo corporation exists. During interim occupancy you pay an interim occupancy fee whether or not you actually move in.

That fee cannot exceed the total of three things: monthly interest on the unpaid balance at the prescribed rate, estimated monthly municipal taxes, and projected common expenses for the unit.

Once the corporation is running, you will pay monthly common expense fees. These cover maintaining the common elements, reserve fund contributions, and services such as cleaning, building maintenance and condo management. Your share is a percentage set in the declaration and may vary with unit size.

Your deposits and what protects them

Money a condo builder receives, including deposits, must generally be held in trust under the Condominium Act. If a builder terminates the agreement, it must return your deposit in full within 10 days.

If a builder does not refund a deposit, Tarion's deposit protection covers up to $20,000 plus a limited amount of accrued interest.

• Keep copies of your purchase agreement and every cancelled deposit cheque.
• Tarion assessment of a deposit claim can take up to six months.

Delays can add costs of their own

The Statement of Critical Dates in the Tarion Addendum sets your occupancy dates. If occupancy is delayed, compensation is capped at $7,500 in total. It includes a flat $150 a day for living expenses with no receipts needed, plus other costs such as moving and storage, which need receipts.

If the builder gives less than 10 days' notice of an occupancy delay, you receive $1,500. If the unit is not ready by the Outside Occupancy Date, you have 30 days to terminate and are then entitled to a full refund of all money paid plus interest. Check the Statement of Critical Dates in the Addendum attached to your own agreement, because it sets your occupancy dates, and any condition allowing the builder to cancel must be one listed in Schedule A of the Addendum.

What to do next

• Ask the builder's lawyer for the statement of adjustments in writing well before closing.
• Ask your lawyer or accountant which of HST, development levies and utility connection charges apply to you, and who pays each.
• Confirm your interim occupancy fee and your expected monthly common expenses.
• Review the Statement of Critical Dates in your Tarion Addendum.
• Set aside funds for closing costs beyond the price, including legal fees and moving costs.

Frequently asked questions