Interim Occupancy Closings in Ontario: What Buyers Need to Know

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You’ve signed the paperwork, made your deposit, and are waiting for your condo to be ready. Then one day, you receive a letter from the builder titled “Interim Occupancy Closing Notice.” You pause and think—what is this? You haven’t heard much about it. There’s no talk of title transfer, no mortgage instructions from your lender. Just a new date and instructions to prepare for occupancy.

As real estate lawyers, we get this question all time. Interim occupancy closings are a common but often misunderstood phase in the pre-construction condo journey. For many buyers, especially first-timers, this stage raises questions: Why am I paying monthly fees when I haven’t closed? What rights do I have during this period? Can I rent out the unit? What happens next?

In this blog, we’ll walk through exactly what interim occupancy means, how it works, what you’re paying for, and the rights—and limits—you have until final closing. Whether you’re a buyer preparing to move in or just curious about how the process unfolds in Ontario, this guide will give you the clarity you need to move forward with confidence.

What Is Interim Occupancy?

In Ontario, when you buy a pre-construction condominium, there’s often a period where you’re allowed to move into the unit before you officially own it. This stage is known as interim occupancy. During this time, you have physical possession of the unit—but legal ownership has not yet transferred to you. That happens later, once the building is fully completed and registered with the municipality.

This can feel counterintuitive. You’ve paid your deposit, you’ve been given the keys, and you’re living in the unit. But from a legal standpoint, you’re still considered an “occupant,” not an “owner.” There’s no title registered in your name, and you can’t secure a mortgage against the property until final closing. Instead, you’re essentially leasing the unit from the developer under the terms of your purchase agreement.

Interim Closing vs. Final Closing

The closing of a pre-construction condo happens in two stages. First is interim closing, when the unit is deemed ready for occupancy and you’re allowed to move in. The second is final closing, which happens later—sometimes months later—when the entire condominium building is registered as a legal entity and title can be transferred to individual owners. Both closings can be completed by way or virtual or remote signing.

The interim closing is when you start living in the unit. The final closing is when you actually become the legal owner.

During the interim period, you don’t make mortgage payments because you haven’t received title. Instead, you pay what are known as interim occupancy fees, which we’ll break down in detail later in this blog. Final closing, on the other hand, is when your mortgage kicks in, the title is registered in your name, and you assume full legal rights to the property. Legal fees will typically be lower at interim closing versus final closing.

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Interim Occupancy Period

The length of the interim occupancy period can vary widely, depending on how far along the building is in the registration process. For some buyers, it might last a few short months. For others—particularly those on higher floors or in larger developments—it can stretch out for a year or more. In extreme cases, interim occupancy has lasted up to two years.

The specific timing is outlined in your purchase agreement, but the actual length is influenced by how quickly the builder can get the rest of the building finished and approved by the city. It’s not uncommon for lower-floor units to reach occupancy well before the upper levels are ready, which is why those buyers often enter interim occupancy earlier and remain in it longer.

Why It Lasts This Long

There are a few key reasons why the interim occupancy period exists—and why it can drag on.

First, the developer must complete all “common elements” of the building before it can be registered as a condominium. These include hallways, elevators, the lobby, underground parking, amenity spaces, and other shared areas. Even if your unit is finished, the building as a whole may not meet the requirements for registration until these shared spaces are completed to the municipality’s satisfaction.

Second, the building must pass a series of inspections and obtain the necessary occupancy and fire safety permits from the city. This process can be time-consuming and often involves multiple municipal departments.

Finally, once the building is complete, the developer must submit an application to the local land registry office to legally register the condominium. Only after registration can title to individual units be transferred to buyers, triggering final closings.

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Interim Occupancy Fees Explained

Components of the Fee

When you take possession of a condo unit during interim occupancy, you’re required to start paying a monthly fee to the developer. These payments are often misunderstood—and frequently resented—because they don’t reduce your purchase price or go toward your mortgage. So what exactly are you paying for?

Interim occupancy fees typically have three components:

1. Interest on the Unpaid Purchase Price
   Since you haven’t finalized your mortgage or paid the full purchase price, the developer is allowed to charge you interest on the outstanding balance. This isn’t based on your personal mortgage rate—it’s calculated using a rate set by the Bank of Canada (specifically, the 1-year conventional mortgage rate). This amount is determined by the terms in your purchase agreement.
2. Estimated Property Taxes
   The developer will charge you an estimate of the municipal property taxes for your unit. These are not the actual taxes assessed by the city, but rather a projection based on comparable properties. Once you become the legal owner at final closing, you’ll start paying property taxes directly to the municipality.
3. Estimated Condo Maintenance Fees
   These are your projected monthly contributions toward the condominium’s shared expenses—things like cleaning, landscaping, security, and utilities for common areas. Like the tax estimate, this figure is based on a budget prepared by the developer and submitted as part of the condo’s disclosure documents. These are often referred to as common expenses.

Why It’s Not a Deposit

One of the most frustrating aspects of interim occupancy for buyers is realizing that these fees don’t count toward the purchase price. They aren’t reducing your principal. They aren’t being held in trust. They aren’t building equity. In fact, they’re often referred to as “phantom rent”—because you’re paying for the right to live in your unit without actually owning it.

This can be hard to accept, especially for first-time buyers who’ve already made a sizable deposit and are eager to start building equity. But under Ontario law, this arrangement is legal and standard practice in pre-construction condo sales. Understanding this upfront helps manage expectations, budget closing costs, and avoid unpleasant surprises once you receive your interim occupancy notice.

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Rights and Restrictions During Interim Occupancy

Occupier vs. Owner

During the interim occupancy period, you are legally considered an occupant—not an owner. This distinction matters. You don’t yet have title to the unit, which means your rights are not the same as those of a full-fledged condominium owner.

For example, you can’t register a mortgage against the property, list it for sale on MLS, or initiate legal claims through the condo corporation. You also don’t have voting rights at owner meetings or input into condo board decisions. From a legal standpoint, your purchase agreement governs the terms of your possession—not the Condominium Act.

Think of it like leasing your future home from the developer. You can live in the unit, furnish it, and enjoy the space—but your ownership is still pending. Only once the building is registered and title is transferred at final closing will you become the legal owner.

Renting or Assigning the Unit

One of the most common questions buyers ask during interim occupancy is whether they can rent out their unit. The answer depends on your agreement with the builder.

Most Agreements of Purchase and Sale strictly prohibit renting out or assigning the unit during interim occupancy without the developer’s written consent. Doing so without approval may be considered a breach of contract and could put your deal at risk.

Even if the developer permits renting, you need to consider the implications on your HST rebate. If the Canada Revenue Agency determines you didn’t intend to use the unit as your primary residence, you could lose the New Home HST Rebate and be on the hook for thousands of dollars after final closing.

If you’re considering renting your unit during interim occupancy, speak to your real estate lawyer or real estate agent first. They can help you navigate the restrictions in your agreement, request permission from the builder, and assess how it might affect your tax obligations.

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Transition to Final Closing

Final Closing Triggers

Final closing occurs when the condominium building is officially registered with the land registry office. At that point, the developer is legally able to transfer title to individual units. For you as the buyer, this is the moment when the real estate transaction truly closes.

Your lawyer will receive notice of the final closing date and coordinate with your lender to prepare mortgage instructions and arrange for registration of title. You’ll be required to deliver the balance of the purchase price—typically funded through your mortgage—and sign final closing documents to complete the transaction.

This is also when adjustments are finalized. Any differences between the estimated property taxes and condo fees you’ve been paying during interim occupancy and the actual figures will be reconciled on the final Statement of Adjustments.

What Changes After Final Closing

Once final closing takes place, your legal status changes from “occupant” to “owner.” Several key things happen:

• Your mortgage takes effect. You begin making mortgage payments to your lender, based on the terms previously arranged.
• Interim occupancy fees stop. These are replaced by actual monthly condo fees, now paid directly to the condominium corporation.
• You gain full legal rights. You can vote at condo meetings, serve on the board, list the unit for sale, or refinance the property.
• Title is yours. The unit is officially registered in your name with the Ontario Land Registry Office.

It’s a significant legal and financial milestone—marking the true completion of your purchase and the beginning of your ownership journey.

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Summary

Interim occupancy is a unique feature of pre-construction condominium purchases in Ontario. It allows buyers to move into their units before the building is officially registered, but it comes with limitations. During this phase, you’re not yet the legal owner, you can’t register a mortgage, and you’re required to pay interim occupancy fees that don’t count toward your purchase price.

Understanding this two-step closing process—interim occupancy followed by final closing—can help buyers better prepare for the costs, restrictions, and legal implications involved. With the right legal advice and a clear understanding of your rights and obligations, interim occupancy doesn’t have to be confusing or frustrating. It’s just one more step on the road to full ownership.

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If you have questions about Interim Occupancy Closings or any other real estate legal matter, we’re here to help. As real estate law specialists, our mission is to provide the clarity and direction you need to protect your property rights.

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