The tower is finally built. The builder hands you the keys. You move your furniture in. You are home. Except... you don't actually own the condo, and your mortgage hasn't started.
This is Interim Occupancy.
What is Interim Occupancy?
In Ontario, condominium buildings finish from the bottom up. The lower floors are often ready for residents while the penthouse is still a concrete shell. A building cannot officially register with the city as a condominium corporation until the entire structure is complete.
However, the builder wants people to move in immediately to start recovering costs. So, they grant you "Occupancy." You live in the unit, but the builder still holds the legal title.
The Occupancy Fee (Phantom Rent)
Because you are living in the builder's unit, and your mortgage hasn't funded the builder yet (that happens on final closing), you must pay the builder a monthly occupancy fee. This fee is strictly regulated and consists of three parts:
- Interest on the unpaid balance of your purchase price (usually calculated at a 1-year Bank of Canada rate).
- An estimate of the municipal property taxes for your unit.
- An estimate of the common expense (condo) fees.
The Brutal Truth
The occupancy fee does NOT go toward paying down your principal. It acts entirely as rent paid to the builder. This phase usually lasts between 3 and 8 months, but can stretch over a year in rare cases for mega-towers.
Final Closing Day
Eventually, the building registers with the municipality. Final Closing Day arrives. Your mortgage lender wires the funds to the builder, the title is transferred to your name, and your occupancy fees cease, replaced by your standard mortgage payments.