Interim occupancy fees are monthly payments a buyer makes to the builder of a pre-construction condo during the period between moving into a completed unit and taking legal ownership at final closing. These fees are not applied to the purchase price and do not build equity. Under Section 80(4) of Ontario's Condominium Act, 1998, the builder may charge a monthly amount that cannot exceed the sum of three components: interest on the unpaid balance of the purchase price, estimated municipal property taxes for the unit, and the projected monthly common expense contribution.
This period exists because of how condominium registration works in Ontario. A condo unit cannot be legally transferred to a buyer until the entire building is registered with the Land Registry Office. Registration requires the builder to complete all common elements, including lobbies, hallways, elevators, and amenity spaces. Individual units are often ready well before that process is finished, so the Condominium Act permits builders to grant occupancy in advance while they complete the rest of the building.
The interest component, which is typically the largest portion of the fee, is calculated using the Bank of Canada's reported chartered bank administered interest rate for a conventional one-year mortgage. That rate is locked on the first day of the month in which interim occupancy begins. It applies to the unpaid balance of the purchase price, meaning the total price minus all deposits already paid. Buyers who are able to make an additional lump-sum payment at interim closing can reduce this unpaid balance and lower the interest portion of their monthly fee.
The occupancy period typically lasts three to six months but can extend to a year or longer in large developments. Lower-floor units tend to be ready earlier, which means those buyers often spend more time in interim occupancy before the building registers and final closing occurs. Builders are prohibited under the Condominium Act from profiting on these fees; they are meant only to cover the carrying costs of the development.
At final closing, interim occupancy fees stop. The buyer's mortgage is funded, title transfers into the buyer's name, and monthly condo fees begin flowing to the newly formed condominium corporation. The buyer also gains full ownership rights, including the ability to vote at owners' meetings, sell the unit, or refinance.
Buyers should have their Agreement of Purchase and Sale reviewed by a real estate lawyer before the 10-day cooling-off period expires, as the occupancy fee provisions and the Statement of Critical Dates are outlined in that document.
