Interim occupancy fees (condominiums only)

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The pre-construction condo you bought two or three years ago has finally gone from rendering to reality and you now have the keys to a new, move-in-ready unit in your hands.

Congratulations, you can haul over all your belongings and start living in the condo.

However, while you can move in, the title of ownership hasn’t technically transferred to your name just yet.

How come?

You’ve entered the first of a two-stage process involved in closing on a new or pre-construction condo, known as the interim occupancy period.

It’ll be a few months before you reach the second and final stage, aptly titled final closing, when the building is officially registered and ownership is transferred to individual residents, including yourself.

Interim Occupancy vs Final Closing

Interim occupancy specifically refers to the time period when your unit is ready but construction on the whole building isn’t complete and the residence isn’t officially registered with The Land Registry Office.

While interim occupancy is beneficial because it means you can take possession earlier, rather than have to wait for the developer to complete all the other units in the building before you can move in, it does add an extra step of confusion to the pre-construction closing process.


During the interim occupancy period, you’ll have to pay the real estate developer a fee. 

Since you’re not legally the property owner in this stage, your mortgage isn’t part of the equation yet. Instead, you’ll pay a fee “or rent”  to the real estate developer to live in the unit for the extent of the interim occupancy period until final closing arrives.

The monthly interim occupancy fee tends to be significantly lower than what a mortgage would cost per-month and only helps the builder offset some final operational costs during the last stages of construction.

The real estate developer must charge the interim fees at-cost and the Condominium Act explicitly outlines that real estate developers are not able to make a profit through these fees. Simply put, developers are incentivized to make sure interim occupancy is as short as possible because they’ll only make a profit once final closing arrives.

What do interim occupancy fees cover?

In total, interim occupancy fees consist of three main components:

  1. Common expenses (costs involved in running/operating the building. In many ways, this cost is similar to maintenance fees that will continue after the interim occupancy period is complete);

  2. Monthly municipal property tax;

  3. Interest on the unpaid balance of the purchase price on your condo. Simply put, you’re paying off the interest the real estate developer owes to the bank for your specific unit. You’re only covering interest (not the principal), so payments are lower than a traditional loan;

Interim occupancy fees must be paid and can’t be avoided, even if you don’t actually occupy the unit during this period. Remember, under the Condominium Act, real estate developers are restricted from making a profit off these fees and they’re all billed at-cost in order to cover expenses required during the final phase of construction.

Can I rent my unit during interim occupancy?

Here’s where things can get a little complicated from a legal standpoint.

Technically speaking, during the interim occupancy period, you do not own the unit. Therefore, if you wish to lease during this stage, you’ll need authorization from the real estate developer (in writing) to do so.

The best time to get the go-ahead is long before construction has even begun when you’re first purchasing the new-build condo. Through the guidance of your lawyer, permission to rent during interim occupancy can be included in your Agreement of Purchase and Sale.

It’s important to note that if you do want to rent the unit during interim occupancy, you’re telling the real estate developer you will not be the principal resident and the property will serve as an investment vehicle. Consequently, you won’t be eligible for the New Home Rebate and will be required to pay HST on top of your purchase price. That can add to upwards of $24,000.

Don’t fret, you can still receive the HST rebate, even as an investor leasing your unit. But, rather than collect the rebate right away, you’ll have to pay HST upfront and you’ll be rebated around two months after you submit proof of a one-year lease agreement to the Canadian Revenue Agency (CRA).

You can read more on the how HST Rebate on new condos works for end-users versus investors here.

How long does interim occupancy last?

There’s no one size fits all answer and the interim occupancy period does vary from one condo development to the next.

While it tends to hover between three and eight months, in several cases, it can last for upwards of one year.

One of the best ways to ensure you live through a short interim occupancy period is to buy from an experienced real estate developer with a solid track record of ensuring a project is completed and registered with the municipality in less time.