Most first time pre construction condo buyers in Ontario do not realize they are signing up for two closings, not one. You move into your unit on the interim occupancy date, pay the builder monthly “occupancy fees” that look like rent but are not, and then close again months (sometimes more than a year) later when the building is registered.
In between, you are living in a unit you do not legally own, paying interest on a mortgage that has not funded yet, and watching the builder bank fees that do not reduce your purchase price. Understanding the difference between interim occupancy and final closing is the difference between budgeting realistically and getting blindsided.
This guide breaks down both stages, the law that governs them under the Condominium Act, 1998, the Tarion warranty rights you have, the costs you will face, and the traps to avoid.
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What is Interim Occupancy vs Final Closing?
Interim occupancy is the period after your unit is built and habitable but before the condominium corporation is legally registered. You can live in the unit, but you do not own it. The builder still holds title. You pay the builder a monthly “occupancy fee” until final closing.
Final closing happens after the condominium declaration and description are registered at the Land Registry Office under the Condominium Act, 1998. Title transfers to you, your mortgage funds, you pay land transfer tax and final closing costs, and you become the legal owner.
The gap between the two can be as short as a few weeks for a small low rise condo, or as long as 18 to 24 months for a large high rise. During the interim period, you have most of the responsibilities of ownership without any of the equity benefits.
The Big Picture Two Closings One Purchase
Buying a pre construction condo in Ontario follows a multi step timeline.
Signing the Agreement of Purchase and Sale (APS). You sign the builder’s APS, often years before the building is finished. You pay a deposit, typically 15 to 20 percent of the purchase price, in scheduled installments. Section 73 of the Condominium Act, 1998 gives you a 10 day cooling off period after receiving the disclosure statement and the fully executed APS, during which you can rescind without penalty.
Construction. The builder builds. This can take 3 to 7 years from the APS signing date, depending on the project.
Pre Delivery Inspection (PDI). Before you take occupancy, you walk through the unit with a builder representative. Anything not built to specification gets noted on the PDI form. This is your one chance to document deficiencies for Tarion warranty purposes.
Interim Occupancy. Once the City issues an Occupancy Permit for your floor (often before the whole building is finished), you can move in. The builder still owns the unit legally. You pay monthly occupancy fees.
Condominium Registration. The builder finalizes the condominium declaration and description and registers them at the Land Registry Office under the Condominium Act, 1998. This creates the condo corporation as a legal entity and creates individual condo units that can be owned separately.
Final Closing. After registration, your lawyer completes final closing. Title transfers to you. Your mortgage funds. You pay land transfer tax and the remaining purchase price.
The two closing structure exists because Ontario law does not permit individual unit ownership until the condo corporation is registered. Until that happens, the building is one parcel of land owned by the builder, and the only legal mechanism for letting buyers move in is interim occupancy.
What Interim Occupancy Actually Is
Interim occupancy is governed by section 80 of the Condominium Act, 1998. The Act allows a builder to deliver occupancy of a unit before the condominium corporation is registered, provided that an Occupancy Permit has been issued by the municipality, the unit is fit for occupancy, and the buyer pays the occupancy charges set out in section 80.
Several legal characteristics of interim occupancy are worth understanding clearly.
No ownership. The builder still holds title to the property. You cannot sell, refinance, or transfer the unit. You cannot register a mortgage against it.
No equity build up. Your interim occupancy fees do not reduce your purchase price. They are not rent in a residential tenancy sense, and they are not mortgage payments. They are fees authorized by section 82 of the Condominium Act.
Limited rights. You have the right to occupy under the APS, but your rights are contractual, not proprietary. If you stop paying the occupancy fees, the builder can take possession and pursue you for unpaid amounts.
Insurance. The builder’s insurance typically covers the building during interim occupancy, but you should still carry tenant style content and liability coverage for your personal belongings.
No condo board. The condominium corporation does not exist yet. The builder controls the building, including any amenities, common areas, and shared services. The condo board is not elected until after the first annual general meeting following registration.
Voting rights deferred. You cannot vote on condo matters because there are no condo matters to vote on until the corporation is created.
The Tarion Addendum and Statement of Critical Dates
Every pre construction agreement of purchase and sale in Ontario must include the Tarion Addendum, a standard form developed by Tarion Warranty Corporation and the Home Construction Regulatory Authority (HCRA). The Addendum is part of the warranty framework under the Ontario New Home Warranties Plan Act and the New Home Construction Licensing Act, 2017.
The first page of the Addendum is the Statement of Critical Dates, which sets out the key deadlines for your purchase. Pay attention to these in particular.
First Tentative Occupancy Date. The earliest date the builder thinks your unit might be ready. This is preliminary and often moves.
Subsequent Tentative Occupancy Dates. The builder can revise the tentative date by providing written notice within strict timeframes. Each revision must follow specific notice rules under the Addendum.
Firm Occupancy Date. Once you are within 90 days of a tentative date, that date becomes firm. After this, the builder cannot delay occupancy without paying compensation under the Addendum, unless an Unavoidable Delay applies.
Delayed Occupancy Date. If the builder cannot meet the Firm Occupancy Date, the builder must set a new Delayed Occupancy Date and notify you at least 10 days before the Firm Occupancy Date. Failure to give 10 days notice triggers compensation back to 10 days before the Firm Date.
Outside Occupancy Date. The latest date the builder agreed to provide occupancy. After this, you have a 30 day Purchaser’s Termination Period during which you can terminate the APS and recover your deposit with interest.
The Statement of Critical Dates is signed by both you and the builder. If the builder asks you to amend any of these dates later, get a lawyer to review the amendment before you sign. Amendments often contain clauses that waive your right to compensation.
Interim Occupancy Fees Explained
Section 82 of the Condominium Act, 1998 authorizes the builder to charge three components in the monthly interim occupancy fee.
Interest on the unpaid balance of the purchase price. This is the largest portion for most buyers. The interest rate is set at the prescribed rate under Ontario Regulation 48/01 (currently tied to a Bank of Canada reference rate). On a $700,000 purchase with $140,000 paid as deposit, the unpaid balance is $560,000. At a 5 percent prescribed rate, the monthly interest portion is about $2,333.
Estimated monthly common expenses. The builder estimates what your share of condominium maintenance fees will be after registration. This is an estimate only, and the actual fees after registration may be higher or lower.
Estimated municipal taxes. Property taxes the builder estimates will apply to your unit. Again, these are estimates and may be adjusted at final closing.
A typical interim occupancy fee on a $700,000 Toronto condo runs $3,000 to $4,000 per month. None of this money applies to your purchase price, reduces your mortgage, or builds equity. It is a cost of occupying the unit before legal ownership transfers.
For investor buyers, rental income during interim occupancy can offset some of the carrying cost. Tax treatment is tricky, and the deductibility of various expenses during interim occupancy depends on the buyer’s specific tax situation. Talk to an accountant before assuming the interim period is tax neutral.
What Final Closing Looks Like
Final closing happens after the condo declaration and description are registered at the Land Registry Office. The builder’s lawyer notifies your lawyer that closing can be scheduled, usually with about 21 days notice.
At final closing, several things happen at once.
Title transfers. Your lawyer registers the transfer at Teraview, the electronic Land Registry system. You become the legal owner of the unit.
Your mortgage funds. Your lender wires the mortgage proceeds to your lawyer. The lender registers a charge against your unit. Your monthly mortgage payments start within a month.
You pay the balance of the purchase price. Whatever portion of the purchase price was not covered by your deposits comes due. Your mortgage proceeds plus any cash you contribute must cover this balance, plus closing costs.
Land transfer tax is paid. Ontario Land Transfer Tax applies, with rates rising marginally from 0.5 percent on the first $55,000 to 2.5 percent on portions over $2 million. Toronto buyers pay an additional Toronto Municipal Land Transfer Tax. First time home buyers can claim rebates of up to $4,000 provincially and up to $4,475 in Toronto. See our Agreement of Purchase and Sale guide for full details on closing costs.
HST is finalized. New construction attracts 13 percent HST. Most builders quote a price that already includes HST net of the new housing rebate, but the structure varies. Confirm with your lawyer.
Adjustments are calculated. The builder will request reimbursement for various charges. The statement of adjustments sums up everything owed at closing.
Title insurance is purchased. A one time title insurance premium protects against title defects, survey issues, and certain fraud risks.
Final closing legal fees and disbursements typically run $1,500 to $2,500 for an Ontario residential condo, on top of land transfer taxes, title insurance, and other closing costs.
Delayed Occupancy Compensation
The Tarion Addendum provides compensation to the buyer when the builder misses the Firm Occupancy Date.
The basic compensation is $150 per day of delay. This covers the buyer’s additional living expenses while waiting for occupancy.
The maximum payable is $7,500. Tarion caps total compensation under the standard Addendum at $7,500, which represents 50 days of delay.
Additional compensation for late notice. If the builder fails to give at least 10 days written notice of the delay, an additional $1,500 is payable ($150 x 10 days).
Receipts for additional expenses. If you incurred specific costs because of the delay (moving company fees, storage fees, additional accommodation), you may be entitled to recover them with receipts, separately from the per diem.
Unavoidable Delays. A strike, fire, flood, act of God, civil insurrection, act of war, act of terrorism, or pandemic can extend the Firm Occupancy Date without triggering compensation. The builder must give written notice within 20 days of the start and end of the delay.
Claim deadlines. You have 180 days from the date you take occupancy to submit a claim to the builder. If the builder does not pay, you have 365 days from occupancy to file a claim with Tarion through the MyHome online portal.
For condo purchases, if delayed occupancy compensation is owed and settled before final closing, the compensation often shows up as a credit on the statement of adjustments at final closing.
For larger delays (months or years past the Outside Occupancy Date), you can terminate the APS during the 30 day Purchaser’s Termination Period and recover your deposit with interest. Common law damages may also be available if the delay caused additional losses.
Comparison Table Interim Occupancy vs Final Closing
| Factor | Interim Occupancy | Final Closing |
| Ownership | Builder retains title | Title transfers to buyer |
| Authority | Section 80 of Condominium Act, 1998 | Land Titles Act registration |
| Mortgage status | Not yet funded | Mortgage funds and registers |
| Monthly payments | Occupancy fee to builder (interest, taxes, maintenance estimate) | Mortgage payment, property tax, condo fees |
| Land Transfer Tax | Not yet payable | Payable on closing |
| Equity | No equity accumulation | Equity starts building |
| Right to sell or lease | Restricted, builder consent often required | Full rights as owner |
| Right to renovate | Restricted, builder consent often required | Full rights as owner |
| Tarion warranty | One year warranty starts on occupancy | Continues through final closing |
| Condo voting rights | None, corporation does not exist yet | Yes, as registered owner |
| Property tax | Estimated portion in occupancy fee | Directly assessed and paid by owner |
| Title insurance | Not applicable | Required by most lenders |
| Lawyer involvement | Minimal during occupancy | Full closing transaction |
The Phantom Mortgage Trap
Many buyers do not realize the financial implications of their mortgage not funding at interim occupancy.
Rate hold expiry. Your mortgage pre approval comes with a rate hold of 90 to 120 days. If interim occupancy is 6 months before final closing, your rate hold will expire, and you will re qualify at whatever rates apply at the time of final closing. In a rising rate environment, this can add hundreds of dollars to your monthly payment over the life of the mortgage.
Stress test changes. Mortgage qualifying rules can change between your APS signing date and final closing. The Office of the Superintendent of Financial Institutions (OSFI) periodically adjusts the qualifying stress test. A buyer who could afford a $700,000 condo at the time of the APS may not qualify at final closing if rules have tightened.
Income changes. Job loss, reduced income, large debts, or credit score deterioration between interim occupancy and final closing can derail your mortgage approval. If you cannot fund the mortgage at final closing, you can lose your deposit and face damages.
Appraisal risk. Lenders re appraise the property at final closing. If the appraised value has fallen below the contract price (common in a falling market), the lender may reduce the mortgage amount, requiring you to come up with more cash.
The practical takeaway is that nothing about your financial position should change materially between interim occupancy and final closing. Do not change jobs. Do not take on new debt. Do not co sign for anyone. Do not let your credit score slip. Treat the interim period as a financial holding pattern.
HST and Rebates on New Construction
New construction in Ontario attracts 13 percent HST (5 percent federal GST and 8 percent provincial component). Two rebates can offset some of the HST cost.
Federal New Housing Rebate. Available on the federal portion (GST) of HST for new homes priced up to $450,000, scaling down to zero at $450,000. The maximum federal rebate is approximately $6,300.
Ontario New Housing Rebate. Available on the provincial portion of HST. The maximum Ontario rebate is $24,000 for a buyer who intends to use the property as their primary residence or a family member’s primary residence.
Federal First Time Home Buyer GST/HST Rebate (introduced 2025). Eliminates the federal portion of HST on new homes up to $1 million for eligible first time buyers, with partial relief between $1 million and $1.5 million.
Most Ontario builders quote prices that “include HST net of rebates,” which means the builder applies the rebates against the purchase price assuming the buyer will occupy as a primary residence. If you are an investor buying to rent (the buyer will not occupy or have a family member occupy as a principal residence), the builder typically charges back the rebate at closing, often adding $20,000 to $30,000 to your closing costs.
You may be able to claim the New Residential Rental Property Rebate after closing if you intend to rent the property for at least 12 months. The application is filed separately and refunds come months later.
Mistakes That Cost Buyers Money
Treating occupancy fees as rent. Occupancy fees do not build equity. They do not reduce the purchase price. They are a cost of occupying the unit before legal ownership. Plan your budget assuming the money is gone.
Not having a lawyer review the APS during the 10 day cooling off period. Section 73 of the Condominium Act gives you 10 days to rescind a pre construction APS. Use that window to have a real estate lawyer flag bad terms, hidden costs, and risky clauses.
Letting mortgage pre approval lapse. Mortgage pre approvals expire. Keep your lender updated through interim occupancy and into final closing. Re qualify in advance of closing to avoid surprises.
Not budgeting for closing costs. Final closing costs (legal fees, land transfer tax, title insurance, adjustments, HST rebate clawback for investors) can run 3 to 5 percent of the purchase price on top of the price itself. Many buyers come up short at final closing.
Skipping the Pre Delivery Inspection (PDI). The PDI is your one chance to document deficiencies for Tarion warranty purposes. Skipping it or rushing through it means you lose the ability to claim against the builder for items not on the PDI form.
Signing builder amendments without legal review. Builders frequently propose amendments to extend dates, change unit specifications, or modify deposit schedules. Many amendments contain clauses waiving your Tarion compensation rights. Always have a lawyer review.
Missing claim deadlines. Tarion warranty claims have strict deadlines (30 days, 1 year, 2 years, 7 years depending on the defect). Late claims are denied.
Forgetting HST treatment for investors. Buying to rent triggers HST rebate clawback at final closing. Plan for it.
Frequently Asked Questions
What is the difference between interim occupancy and final closing in Ontario?
Interim occupancy is the period after your unit is built and habitable but before the condominium corporation is legally registered. You can live in the unit, but the builder still owns it and you pay monthly occupancy fees. Final closing is when the condo corporation is registered, title transfers to you, your mortgage funds, you pay land transfer tax, and you officially become the owner.
How long does interim occupancy last in Ontario?
It varies widely. Small low rise condos may have interim occupancy of just a few weeks. Large high rise condos can have interim occupancy of 12 to 24 months. The period depends on how long it takes the builder to finish the entire building, obtain occupancy permits for all floors, and register the condo declaration at the Land Registry Office.
Do I pay a mortgage during interim occupancy?
No. Your mortgage does not fund until final closing. During interim occupancy, you pay the builder a monthly occupancy fee that covers interest on the unpaid balance of the purchase price, estimated property taxes, and estimated common element fees. None of this money applies to your mortgage or reduces your purchase price.
Can I claim compensation if my pre construction condo is delayed in Ontario?
Yes, through the Tarion Addendum. If the builder misses the Firm Occupancy Date, you are entitled to $150 per day of delay, up to a maximum of $7,500. If the builder fails to give 10 days notice of the delay, an additional $1,500 is payable. Claims must be submitted to the builder within 180 days of taking occupancy, or to Tarion within 365 days of taking occupancy.
Can I sell or rent out my unit during interim occupancy?
Generally, no, without the builder’s consent. The APS usually restricts assignment, subletting, and listing during interim occupancy. Some builders allow rental with written consent. Others prohibit it entirely. Selling (assigning) the unit before final closing is heavily restricted and often triggers significant assignment fees and tax issues.
What happens if the building is never registered as a condo?
This is rare but does happen, usually in distressed projects. If the Outside Occupancy Date passes without occupancy, you can terminate the APS within the 30 day Purchaser’s Termination Period and recover your deposit with interest. If the building is occupied but registration is delayed indefinitely, you remain in interim occupancy paying monthly fees with no clear end date. This is the scenario that most justifies hiring a real estate lawyer early.
Final Word
Pre construction condos can be a smart way into the Ontario market, but the two stage closing process catches most first time buyers off guard. The interim occupancy period is the most misunderstood. You pay thousands of dollars a month without building equity, while the builder retains legal control of the unit.
Before signing the APS, use the 10 day cooling off period under section 73 of the Condominium Act to have an experienced real estate lawyer in Toronto review the agreement and the Tarion Addendum. Budget realistically for interim occupancy fees. Keep your mortgage and finances stable through the entire period. Plan for final closing costs that can add 3 to 5 percent on top of the purchase price.
Insight Law Professional Corporation is a real estate law firm based in Toronto, serving pre construction and resale condo buyers across Ontario.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
