If you’re planning to buy a pre-construction condo (or you already did buy one without a Realtor’s advice), you should understand what is going to happen when that pit in the ground becomes your new building and you get a letter from the builder telling you the unit is ready for “occupancy.”
The “occupancy period” or “interim occupancy” occurs when a condo unit meets certain building requirements and can be deemed ready for occupancy. However, at this stage, the entire building will most likely not be fully completed – halls and common areas may not be carpeted or tiled, amenity floors may not be completed, or upper floor units may not be finished.
At this point you will attend an “Occupancy Closing” where you’ll meet with your lawyer to sign some developer paperwork and receive keys to your unit. However, keep in mind that the Occupancy Closing, IS NOT the actual day of ownership which will not occur until a second closing date called “Registration.” Registration is when the final closing occurs and your unit is officially entered into the Land Registry System in Ontario. At that point, you are able to take out a mortgage on your unit and the balance of your purchase price is paid to the developer.
Occupancy Closing is also the day where you will be required to provide 4 or 5 post-dated cheques for payment of “Occupancy Fees.” The Occupancy Fee consists of 3 costs that the developer wants to be reimbursed for: 1) your estimated monthly property taxes, 2) your estimated maintenance fees, and 3) interest on the unpaid balance due on your unit.
The Occupancy Period usually lasts about 3 to 6 months and ends when the building is registered. If you are on a high floor, the occupancy period will usually be shorter since higher units occupy last. If you are on a low floor, your occupancy period may be longer.
There is nothing you can do about occupancy fees and it is a normal procedure in new construction. It also shouldn’t deter you from wanting to purchase a pre-construction condo. You are not really paying much more than you would be once you take full ownership because you will still have property taxes, common expenses, and interest on a mortgage (unless you pay all cash).
Keep in mind that it is in the developer’s best interest to register the building as fast as possible because they do not get payment on their condo units until owners can get their mortgages registered on title.
If you have any questions about occupancy fees, occupancy closings or new condo registration, feel free to contact me!
How may I help you today? Direct line: 416-219-6662
