Interim Occupancy Fees on a New Ontario Condo Explained

You may be able to move into your new condo before the building is fully registered. During that gap you pay a monthly interim occupancy fee, and the fee can include the projected common expense fees for your unit along with interest and estimated municipal taxes.

Many buyers assume these payments are like rent that builds up toward ownership. They are not. This article explains what the fees cover, how they are limited, and what to know if your dates change.

What interim occupancy means

Interim occupancy is the period when you live in the unit but the condominium corporation has not yet been registered. Ownership of a new condo unit can only transfer once the corporation has been registered, and interim occupancy fees stop when title transfers.

Until then, you occupy the unit under your agreement of purchase and sale, and you pay the builder the fee set out in it.

What the fee can include

Under the Condominium Act, the fee cannot exceed the total of three things.

• Monthly interest on the unpaid balance of the price, at the prescribed rate.
• The estimated monthly municipal taxes.
• The projected common expense fees for the unit.

Your agreement should show how the builder calculates the amount. Ask a lawyer to review it before you sign.

Why the fees are not equity

Interim occupancy fees apply only during the interim occupancy period, and they are not credited to the purchase price. You owe them whether or not you move in.

So if you rent the unit out or leave it empty, the fee still applies. Budget for them as a carrying cost on top of your savings for closing.

If occupancy or closing dates slip

A delay on a new condo can lead to Tarion delayed-occupancy compensation of up to $7,500 in total, with living expenses paid at a fixed $150 a day and no receipts needed. A builder that fails to give 10 days' notice of an occupancy delay must pay you $1,500.

There are limits. While the occupancy date is tentative, the builder may extend it several times without paying compensation, but must give 90 days' notice of each extension. If the unit is not ready by the Outside Occupancy Date, you have 30 days to terminate the agreement. The Tarion Addendum overrides any conflicting terms, and early-termination conditions it does not allow cannot be enforced.

Delayed-occupancy claim deadlines are described differently in different places, so confirm your deadline with Tarion or a lawyer before relying on a date.

Other money and protections around occupancy

The interim occupancy fee is only one part of the cost of a new condo. Builders must list extra charges and expected adjustments to the final price, with dollar values, in Schedule B of the Tarion Addendum. If an adjustment such as development charges could produce rebates, the agreement must say how those rebates will be shared.

The builder pays the Tarion enrolment fee, but Tarion says builders commonly pass it on to buyers in the statement of adjustments on closing, and not all do. Whether it applies to you depends on your agreement.

• Builders generally must hold the deposits and other money they receive for a condo project in trust.
• Tarion protects deposits and other payments, including money for upgrades and extras, up to $20,000 plus a limited amount of built-up interest. This applies where the builder goes bankrupt, fundamentally breaches the agreement, or you rescind before closing, and the deal does not close.
• Payments made to reserve or hold a unit before the purchase agreement is signed have no Tarion deposit protection.
• A buyer of a pre-construction condo has a 10-day cooling-off period to rescind, and the agreement does not bind the buyer until they receive both the disclosure statement and Ontario's Residential Condominium Buyers' Guide.

Before you take possession, every builder must do a thorough walk-through with you, called the pre-delivery inspection (PDI), and must complete the PDI Form. You or a designate must attend, and a designate needs written authority to sign the form. Record damaged, incomplete or missing items, items that do not work, and unauthorized substitutions, and take photos.

The PDI Form is not a request for warranty service. Items still not fixed at move-in must go on the Initial Form, Mid-Year Form or Year-End Form. For a condo, the one-year Tarion warranty starts on the occupancy date. Which form rules apply can depend on when your warranty started, so confirm your dates with Tarion or a lawyer.

What to do next

• Find the interim occupancy fee clause and any Schedule B items in your agreement.
• Ask how the interest, tax and common expense estimates are calculated.
• Keep every notice of a date change and note when you received it.
• Plan your budget around fees that will not reduce the price.
• Check whether your agreement passes the Tarion enrolment fee on to you.
• Book your pre-delivery inspection, bring photos or a camera, and record every issue you see.
• Have a lawyer review your options before you terminate or accept a delay.

Frequently asked questions