Canada's Condominium Magazine
Apartment condominiums continue to dominate the market in urban areas of the GTA, and within that segment are a growing majority who prefer new-build and pre-build condos.
The advantages of new-build are substantial and compelling — customization, brand new condo, no depreciation, often buying at prices set in lower markets, warranties — but at the same time the agreements tend to be just slightly more complicated. This is necessary, as there are some aspects of new-build condo buying that are different: notably, Interim Occupancy Period and Registration Date.
These can impact your mortgage applications, so they are important to understand. First of all, mortgage lenders can (usually) only hold the promised rates for up to 120 days. If your Registration Date ends up later, the rate may be slightly different — unless you communicate and work with your lender. The good news for you: you won’t be paying the closing costs (balance) until your unit closes.
What’s all this mean: Interim Occupancy Date and Registration Date?
Sometimes, there’s no need to have an Interim Occupancy — but it’s often necessary. If you are one of the first occupants of the building, Interim Occupancy for you will be longer. If you are the last one in, there may not be any Interim Occupancy.
Usually, you can’t “register” your ownership until at least 50% or more of the community units are occupied. If you move in early, you will be asked to pay what amounts to “rent” to the builder, in the form of Interim Occupancy Fees. This covers the cost of you living in the unit until such time as your ownership can be registered — on the Registration Date.
According to Tarion, who handle new home warranties:
“When a building is declared fit for occupancy by the municipality, condo buyers can start moving in, usually beginning with the lowest floors, as the builder works his or her way up to complete each suite as well as the common elements. None of the buyers are technically taking ownership yet, and they will all have to wait for some time before they do. But for the meantime, buyers can enjoy their new homes and some of the amenities as well. For those on the lowest floors, that usually means they get to move in sooner, but will have a longer interim occupancy period than those above them.”
It’s nice to be early, to get into your community first, but be prepared, in this case, to pay a little rent while you wait for all the rest of your new neighbours to move in. If you move in near the end, your Interim Occupancy will be shorter (or maybe non-existant).
For some, the occupancy can be many months; for others there may not be one, fo an essentially completed and “moved-in” community.
What does the Interim Occupancy represent. According to Tarion: “The fee is made up of three parts: interest on the unpaid balance of the purchase price of your condo, an estimate on the municipal taxes for your unit, and a projected common expense contribution to keep the building running. The fee is usually charged monthly and requested in the form of post-dated cheques made out to the developer or vendor.”
Timing: what happens and when?
Your developer will give you written notice at least 30 days prior to your Registration Date; often this will be send to your lawyer. It is crucial to inform your lender so that you can finalize your mortgage details and rates.
When does your Interim Occupancy end? On Final Closing, basically, when your condominium is registered — and you receive the title to your new home.
Don’t forget, of course, to allow for closing costs; your lawyer will advise. Then, enjoy your new home!