7 Things You Need to Know Before Investing in Pre-Construction Condos (The Series-Part 3)
Interim Occupancy vs. Closing: what’s the difference?
Interim Occupancy is when you get the keys and can move into your unit – but technically, you don’t own it just yet. With condominiums, you have two ‘closing’ dates:
A) What is Interim Occupancy for Condos?
The first is Interim Occupancy, when you get the keys to your unit. Occupancy for owners is staggered, usually a couple of floors per week, that way everyone isn’t moving in on the same day.
At this point – the building isn’t registered yet. If you bought with a good builder, typically registration and final closing will happen within 6 months after interim occupancy. Builders are notorious for moving extremely quickly and efficiently to get their buildings registered quickly.
B) What are Interim Occupancy Fees?
Interim Occupancy Fees are what you pay the builder to occupy the unit. You don’t have the title to your unit until registration, so your mortgage doesn’t start just yet. Some people call this “rent to the builder” or “phantom rent” – but simply put, it’s just:
C) Your monthly condo maintenance fees
The interest payment on the 80% borrowed for the purchase (assuming 20% down). The builder uses the Bank of Canada key rate to determine your interest payment, and the payment is made to the builder directly.
During the time of interim occupancy, your monthly carry costs will actually be lower than after registration because you haven’t started the principal payment on your mortgage yet.
D) What is Final Closing?
Final closing is when the Builder registers the Condo Corporation with the City. This is when your bank pays the builder the 80% balance, when your mortgage starts, and when you receive the title for your unit.
This is also when final adjustments and closing costs will be calculated and paid, such as legal fees, land transfer tax, and any other closing costs as outlined by your Agreement of Purchase and Sale.
Once you’ve completed the final closing process, you will receive the official title and your mortgage will be registered. Feeling overwhelmed? Don't be - Mourad and his team are the experts when it comes to pre-construction, there is nothing they haven't seen, heard or experienced first hand themselves. They will take the time to walk you through the process and answer all your questions. After all - they are pre-construction owners too!