Interim Occupancy vs Final Closing
This trips up almost every first-time condo buyer. A pre-construction condo has two separate dates — interim occupancy (when you can move in) and final closing (when you actually own it). In between, you pay the builder a monthly occupancy fee that doesn't pay down your mortgage. Freehold homes usually have just one closing, so this only applies to condos.
On this page
The two dates, side by side
| Interim Occupancy | Final Closing | |
|---|---|---|
| What it is | You move in & live there | You legally own the unit |
| Do you own it yet? | No — the builder still holds title | Yes — title transfers to you |
| Your mortgage | Has NOT started | Funds & begins now |
| What you pay | Monthly occupancy fee | Balance of price + closing costs |
| Builds equity? | No (it's "phantom rent") | Yes — you now own the asset |
| Triggered by | City issues an Occupancy Permit | Condo is registered with the province |
Why condos have interim occupancy
A condominium corporation can't be registered with the province until the entire building is finished and inspected — every unit, floor and amenity. But your individual unit may be livable months before that happens, so the city issues an Occupancy Permit for it.
That creates a gap: your unit is ready, but title legally can't transfer yet. Interim occupancy bridges that gap — you move in and use the unit while the building finishes and the condo gets registered. Lower floors are usually completed (and occupied) first; higher floors often have a shorter occupancy period because they're finished closer to registration.
The occupancy fee ("phantom rent") — 3 parts
During interim occupancy you pay the builder a monthly occupancy fee. It is not a mortgage payment, it does not reduce your purchase price, and it does not build equity — which is why people call it "phantom rent." It's made up of three estimated parts:
| Component | What it is |
|---|---|
| Interest on the unpaid balance | Interest on the portion of the purchase price you still owe, charged at the Bank of Canada benchmark rate for a 1-year conventional mortgage. |
| Estimated property taxes | Your unit isn't separately assessed yet, so the builder charges a reasonable estimate. |
| Estimated maintenance / condo fees | Your monthly common-element fee, based on the builder's proposed budget. |
How long does interim occupancy last?
- Commonly 2 to 12 months, though it varies by building.
- Your agreement sets an "Outside Occupancy Date" — the latest date the builder can give you occupancy.
- Contracts often allow interim occupancy to run up to 24–36 months in the worst case before final registration.
- The longer it lasts, the more occupancy fees you pay — so registration timing matters to your wallet.
What you can't do during interim occupancy
- You can't avoid the occupancy fee — it's owed whether or not you actually move in.
- You can't freely rent it out. Leasing to a third party during interim occupancy generally needs the builder's written consent (an amendment).
- You can't sell it outright — you don't hold title yet, so a sale before final closing must be done as an assignment.
What happens at final closing
Once the building is complete and the condo corporation is registered at the Land Registry Office, you reach final closing: title transfers to you, your mortgage funds and begins, and the occupancy fee stops. This is when you truly own your home.
Costs typically due at final closing (your lawyer reviews the Final Statement of Adjustments):
- The remaining balance of the purchase price (via your mortgage + any cash).
- Development charges & levies (park/education levies) — negotiate a cap on these in your APS.
- Land transfer tax (Ontario, plus municipal in Toronto) — first-time buyers may get rebates.
- Tarion enrolment, utility connections, legal fees and HST adjustments.
How to reduce what you pay
- Put more down. A larger deposit shrinks the unpaid balance, which lowers the interest portion of your occupancy fee.
- Negotiate capped development charges and assignment/leasing rights in your agreement up front.
- Plan your financing early — re-confirm your mortgage 6–9 months before final closing. See our pre-construction mortgage guide.
Buying a pre-construction condo and want the occupancy-fee math done before you sign? Talk to Tej & Usha — we'll walk you through the deposit structure, occupancy budget and closing costs so there are no surprises.