If you have purchased a new development condominium in Ontario and are awaiting “closing”, you should be aware that new development condos have two closings: an interim occupancy closing and a final closing. Despite the excitement of receiving the new keys to their unit, many new purchasers of new development condominiums are surprised to find out from their lawyer that title to the purchased property will not be transferred during the interim occupancy closing, but rather on final closing, which may occur several months later.
The Interim Occupancy Closing
During the first of the two closings, purchasers will have the right to take occupancy to their unit in accordance with the signed Agreement of Purchase and Sale and upon signing the necessary interim closing documents as required by the builder and its lawyer. During the interim occupancy period, that is, the duration between the interim occupancy closing and final closing, the purchaser may be required to pay the builder an interim occupancy fee or “rent” during this period. This interim occupancy fees consists of the following three items:
- Interest on the unpaid balance of the purchase price;
- Estimate of the Common Expenses; and
- Estimate of Property Taxes (apportioned monthly).
To reduce the interim occupancy fee, a purchaser may choose to pay the full balance of the purchase price at the interim occupancy closing however, there is a very limited time period from the time of signing the Agreement of Purchase and Sale in which the purchaser must elect to do so.
If you have purchased a unit on a lower floor, you can expect your interim occupancy closing to take place sooner than those who have purchased a unit on a higher level. In this regard, the interim occupancy period will generally be longer for a unit on a lower floor as opposed to a unit on a higher floor. This is due to the fact that all of the other units in the building, as well as the condominium common elements, need to be completed before the condominium can be registered with the respective Land Titles Office for final closing to take place.
On final closing, assuming all conditions are met, the purchaser of a new development condominium will receive title to their property and officially become owners. During this second closing, the purchaser will pay the balance of the purchase price together with all the closing adjustments in accordance with the builder’s statement of adjustments. If a mortgage is required to close the transaction, your lawyer will prepare the necessary mortgage documents in accordance with the lender’s instructions and coordinate the closings funds prior to registration.
Depending on the builder and the particular project, the length of one’s occupancy period can differ widely. Speak with your real estate lawyer to know more about your rights and obligations when purchasing a new development condominium.