I work with many buyers who find buying pre-construction is the ideal way to purchase their new homes or investments. As their agent, I like to prepare them with knowledge that will let them know what they are getting into.
Interim Occupancy and Final Closing were concepts I learned when I purchased my new condo at 530 St Clair, a Lash Development Condo, which today has become a great addition to my portfolio. So once again, I am “Speaking from Experience”.
You will be given two different dates, the interim occupancy date and the closing date. Interim occupancy is typical with pre-construction condos, and the process may be foreign to some, especially first-time homebuyers. Here is a break down on what to expect.
Interim Occupancy Explained
Interim occupancy is the period of time between the day you occupy your unit (move in) and the day you take ownership (close). During this time you get to move in to the suite but you may see that some features of the complex or building are not complete.
Interim occupancy takes place as soon as the city deems the building is safe and ready for homeowners to move in. Typically this can last between three to eighteen months, depending on the project.
Remember, whether you choose to actually live in your suite at this time is up to you, however, all purchasers must pay a monthly fee during this time and this payment is called “Occupancy Fee”. It’s important to note that the occupancy fees are not credited to the final purchase price. Some times this amount is referred to as “phantom rent” because its is a similar amount to paying rent as your mortgage is not in place yet. Many builders do not allow renting, so when buying ask for the “right to lease during occupancy” or ensure the builder understands your purpose for the purchase. As your agent, I will assist with this situation.
Final Closing Explained
The final closing occurs once the developer is ready to register the condominium and transfer ownership to the individual unit purchasers. At this point interim occupancy ends, the building is registered and homeowners may secure a mortgage, rent or sell their suite. A builder assigned property management company will also take over at this time and stay in place until a “hand over” meeting, which will happen in the future.
How much are Occupancy Fees?
Interim occupancy include:
- interest on the unpaid balance of your suite,
- contribution fees for common elements (not unlike maintenance fees) and
- estimated property taxes.
For more details, refer to Section 80(4) of the Condo Act.
What Else do I Need to Know?
During the interim occupancy period, the builder has a number of regulations that must be adhered to. These include providing the services that the condo corporation will take over once the building is registered, such as garbage disposal and (where applicable) concierge as well as maintaining the property and suites to the same manner as the condo corporation (HVAC, fire alarms, etc.). To view the full list of the builder rights and responsibilities, check out section 80(6) of the Condo Act.
Author: Pamela Simons, MBA, SRS
A “Boutique-style” Etobicoke-Based Realtor helping clients find their homes in the vast world of condos. Specializing in investors and Women in Real Estate. Look for more details at PamelaSimons.ca or @pamelacondos