Quick answer: Freehold homes close in one step: you pay the balance, receive title and get the keys on the same day. Condos close in two steps:
- Occupancy. You move in and pay the builder a monthly occupancy fee. That fee covers interest on your unpaid balance, estimated condo fees and estimated property tax. None of it goes toward your purchase price.
- Final closing. Once the condo is registered, you take legal ownership, pay closing costs and your mortgage starts.
Interim occupancy commonly lasts from a few months to more than a year.
Part of our Pre-Construction Investing & Buying Guide.
Occupancy (condos)
What is interim occupancy?
The period between moving into your new condo and the building's registration as a condominium corporation. You can live in the unit, but you don't own it yet. The builder still holds title.
Why is there a delay between occupancy and closing?
A condo can't be registered until the building is substantially complete and surveyed. Units are often ready for people to move in before the whole building, including common areas, is finished and registered.
What is the occupancy fee made of?
| Component | What it is |
|---|---|
| Interest | Interest on the unpaid balance of your purchase price, at a rate set by regulation |
| Common expenses | The estimated monthly condo fees for your unit |
| Property tax | An estimate of the monthly realty taxes for your unit |
It's essentially rent paid to the builder. None of it reduces your purchase price.
How long does interim occupancy last?
Often 3–12 months, and sometimes longer for large or phased projects. Budget for the full period, especially if you're also paying rent or carrying another home.
Can I rent out my unit during occupancy?
Only if your agreement allows it. Some builders permit leasing during occupancy, and others prohibit it until final closing. Check before you sign.
Can I sell my unit during occupancy?
Not through a normal sale, because you don't own it yet. You may be able to assign your agreement if the builder allows it.
Do I pay land transfer tax at occupancy?
No. Land transfer tax is paid at final closing, when title is transferred to you.
Delays
Can my occupancy date be delayed?
Yes. Under the Tarion Addendum, condo builders set tentative occupancy dates and can extend them with proper written notice. Eventually, they must set a firm date. Each agreement also has an outside occupancy date.
Do I get compensation for a delay?
If the builder misses a firm date, or doesn't give proper notice of a delay, you may be entitled to delayed occupancy or closing compensation through Tarion, generally up to $7,500. Keep receipts for extra living costs.
What if the outside date passes?
For condos, if the unit isn't ready by the outside occupancy date, you can usually terminate the agreement and get your deposit back with interest. Get legal advice before you act.
PDI and warranty
What is the PDI?
The pre-delivery inspection, done with the builder before you take possession. Record any damage, missing items or things that don't work, and take photos. Items listed on the PDI form are easier to get fixed.
Can I bring someone to the PDI?
Yes. You can bring a family member, your agent or a home inspector. A professional inspector can spot issues you might miss.
What warranty do I get?
- 1 year: workmanship and materials, and Ontario Building Code violations
- 2 years: water penetration, electrical, plumbing and heating systems, and exterior cladding
- 7 years: major structural defects
How do I submit a warranty claim?
Through Tarion's online portal, using the forms for each period. The 30-Day Form must be submitted in the first 30 days after possession, and the Year-End Form in the last 30 days of the first year. Missing a window can limit your coverage.
Final closing
What happens at final closing for a condo?
Once the condo is registered, your lawyer completes the closing. You pay the balance of the price (usually through your mortgage), land transfer tax and other closing costs. Title is registered in your name.
What closing costs should I expect?
Land transfer tax, development charges and levies (unless capped), the Tarion enrolment fee, utility connections, legal fees, title insurance and adjustments. Condo buyers usually also pay a reserve or working capital fund contribution. See our closing costs checklist.
When does my mortgage start?
At final closing. During interim occupancy, you're paying the occupancy fee instead.
Can the price change at closing?
The purchase price itself shouldn't change, but your total cost can change with adjustments, levies and HST. If you don't qualify for a rebate that was built into the price, you'll owe it at closing.
More FAQs: Buying Process · Financing · Legal Questions
About the author: Ola Otubu is a REALTOR® with Realty ONE Group Reveal, Real Estate Brokerage, and the founder of Buyprecon.ca. He represents buyers of new construction homes and condos across Ontario, from the first deposit through PDI, closing and warranty claims.
This article is general information, not legal advice. Every agreement is different. Speak with a real estate lawyer about your purchase. Sources: Tarion; Condominium Act, 1998.
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