Interim Occupancy Guide

What Is Interimmmm Occupancy?

When a new condominium building is completed, individual units are often ready before the building has been formally registered as a condominium corporation. Interim occupancy is the period between the date your specific unit is available to you and the date the condominium is registered, and title formally transfers to your name.

During this period, you are legally permitted to move into your unit. You do not yet own it. The developer retains legal ownership until final closing, which occurs at registration. The length of the occupancy period varies considerably depending on the building’s complexity, the number of units, municipal registration timelines, and the developer’s pace of completion. In Toronto, occupancy periods of six months to two years are common. High-rise towers with hundreds of units can take significantly longer to register than smaller buildings.

Occupancy Fees

During interim occupancy, your mortgage does not begin. Instead, you pay monthly occupancy fees directly to the developer. Under Ontario’s Condominium Act, these fees are calculated based on three components:

Interest on the unpaid balance of the purchase price (at the prescribed rate / as set out under the Condominium Act and reflected in your Agreement of Purchase and Sale)
An estimated monthly share of property taxes for your unit
An estimated monthly contribution to common expenses (maintenance fees)

These fees are paid to the developer and do not apply toward your purchase price. They are not credited to your final closing costs. They are, in essence, the cost of occupying a unit you do not yet legally own. Understanding this structure in advance is essential to accurate financial planning.

Timelines: Occupancy to Final Closing

The interim occupancy period begins when the developer delivers possession of your specific unit. It ends when the condominium is registered, and Final Closing has occurred for your suite. At that point, title transfers, and your mortgage begins.

Registration timelines are set by the developer and the municipality, not the buyer. Tarion (Ontario’s New Home Warranty program) provides some protection against extended delays, but buyers should plan for the occupancy period to potentially be longer than originally estimated.

Prepare for final closing costs well in advance. For a new condominium in Toronto, these typically include land transfer tax, HST adjustments, development levies, and legal fees, all of which should be anticipated and financially planned for before occupancy begins.

Leasing Your Unit During Occupancy

One of the most common questions investors ask is whether a unit can be leased during interim occupancy. The answer depends on your Agreement of Purchase and Sale. Many developers permit leasing during this period, but conditions vary. Some require builder approval before any lease is signed. Others restrict lease terms or require the buyer to remain the primary occupant. Some prohibit subletting entirely.

If leasing during occupancy is part of your investment strategy, review your APS carefully (ideally with both your lawyer and your brokerage) before proceeding. Proceeding without proper authorization can create legal complications and potentially put your agreement at risk.

When leasing is permitted, the unit is considered new and never-occupied. This has implications for lease pricing, presentation, and tenant attraction. In Toronto’s current rental market, where supply has increased and incentives are more common among competing landlords, setting the right asking rent and presenting the unit effectively are both critical to leasing quickly.

Risks Owners Commonly Overlook

Occupancy Timelines and Carrying Costs

Many purchasers focus on the purchase price and final mortgage financing but underestimate the financial impact of the occupancy period. Because registration timelines can vary, it is important to plan for ongoing occupancy-related costs and maintain a contingency for potential delays before the final closing.

Final closing cost surprises

Development charges, municipal levies, and HST adjustments can add tens of thousands of dollars to the final closing statement. Review the closing cost schedule in your APS before occupancy begins.

Unauthorized alterations

During occupancy, the unit remains the developer’s legal property. Modifications not permitted under your APS can create liability issues at final closing and jeopardize your warranty.

Insurance gaps

Interim occupancy creates a period where the building is not yet registered, and standard condominium insurance policies may not fully apply. Confirm coverage with both the developer and an independent insurance broker.

Leasing without authorization

Leasing during occupancy without proper builder consent can constitute a breach of the APS. Confirm your rights in writing before proceeding.

Preparing Your Unit for Tenants

If you intend to lease your unit during or immediately after interim occupancy, preparation significantly affects leasing outcomes. In a competitive rental market where tenants have more options, well-prepared units lease faster and attract stronger applicants. Key considerations before going to market include:

Window coverings

New condominiums typically do not include blinds or curtains. Installing quality, neutral window coverings is one of the highest-impact, lowest-cost improvements a landlord can make.

Appliances and fixtures

Confirm all appliances are functioning correctly and address any deficiencies with the builder’s warranty team before tenants take possession.

Touch-ups and cleaning

New construction finishes often require minor touch-up work. A professional cleaning before showings significantly improves the first impression.

Staging

Staged units may lease faster and typically attract stronger applications. Even light furnishing and accessorizing may create a more compelling presentation than an empty suite.

Move-In Logistics

New condominium buildings manage move-ins through a structured process. Most buildings require advance booking of the service elevator, restrict move-in hours to specific windows, and require a damage deposit from the building.

Coordinate move-in logistics directly with the builder’s customer care team and property management well in advance. For investor-owners planning to lease immediately upon occupancy, tenant move-in should be scheduled in accordance with the building’s logistics policies. Failing to plan around these processes can result in delays.

Utilities, Insurance, and Key Release

Utilities are typically transferred to the owner at occupancy, not at final closing. You will need to set up hydro and other services before or immediately upon taking possession.

Insurance should also be confirmed before occupancy, including both content and liability coverage appropriate for the occupancy period. If you are leasing the unit to a tenant, landlord insurance is required.

Key release occurs on the occupancy date and is coordinated through your lawyer and the developer’s customer care team. Ensure all documentation has been reviewed and confirmed before attending the key release appointment.

Investor vs. End-User Considerations

The interim occupancy experience differs significantly depending on how you intend to use the unit. End-users moving in for personal occupancy are focused on establishing their new home, managing occupancy fees in lieu of rent, and preparing for final closing. The transition from occupancy fees to mortgage payments is typically straightforward with proper planning.

Investors, by contrast, must manage leasing logistics, tenant qualification, lease drafting, and the offset of rental income against occupancy fees and other carrying costs. Investors should also be aware that rental income earned during interim occupancy is taxable in the year it is received, and that the unit’s HST treatment at final closing may be affected by rental activity during occupancy. These are areas where professional legal and tax guidance is not optional; it is essential.