What is it?
A pre-construction condo does not become yours the moment it is finished. The developer must register the declaration and description for the whole building before the condo corporation exists and individual units can be transferred to buyers. Your unit is often ready before the building is registered, and living there in the meantime is called interim occupancy.
Section 80 of the Condominium Act defines interim occupancy as occupying a proposed unit before the buyer receives a deed in registerable form, and says the purchase agreement may permit or require it. Depending on your contract, interim occupancy may be optional or mandatory.
The day interim occupancy starts is often called the “interim closing.” It is not a real closing. The developer still owns the unit, and your position is closer to a tenant’s.
What changes during interim occupancy?
| Item | Interim occupancy | After final closing |
|---|---|---|
| Ownership | Developer (not yet in your name) | Registered in your name |
| Mortgage | None. Lenders only lend on a registered unit | Mortgage starts; monthly payments begin |
| Monthly payment | Occupancy fee to the developer | Mortgage payment + condo fees + property tax |
| Balance of the price | Not yet paid | Balance, land transfer tax, legal fees and other closing costs |
| Can you live there? | Yes. You pay the fee even if you do not move in | Yes |
| Tarion warranty | 1-, 2- and 7-year warranties start on the occupancy date | Continues |
Summarized from the CAO pre-construction page and section 80 of the Condominium Act. Check your contract for the exact terms.
How is the occupancy fee calculated?
Section 80 (4) of the Condominium Act caps the monthly occupancy fee a developer may charge. It cannot be more than the total of three amounts.
- Monthly interest on the unpaid balance of the price (the price minus the deposits you paid before occupancy). The rate is set by regulation: the chartered bank administered rate for a conventional one-year mortgage most recently reported by the Bank of Canada as of the first day of the month in which you take interim occupancy (O. Reg. 48/01, section 19 (1)).
- A reasonable monthly estimate of the municipal property taxes for the unit.
- The projected monthly common expenses (condo fees) for the unit, based on the first-year budget in the disclosure statement.
Example calculation
The rate and taxes below are assumptions. Use the Bank of Canada figure for your occupancy month and the developer’s notice for taxes and condo fees.
| Item | Amount |
|---|---|
| Purchase price | $700,000 |
| Deposits paid before occupancy (20%) | $140,000 |
| Unpaid balance | $560,000 |
| Monthly interest (assumed 5% a year ÷ 12) | $2,333 |
| Estimated monthly property tax (assumed) | $300 |
| Projected monthly condo fees (assumed) | $450 |
| Maximum monthly occupancy fee | About $3,083 |
Estimate for reference only. The occupancy fee does not reduce your purchase price. Because it is interest, tax and fees rather than payment toward the home, people call it “phantom rent.” The more deposit you have paid, the smaller the interest part.
Lowering the fee: paying the price in full
Section 80 (3) of the Act gives buyers a special right. Before the 10-day cooling-off period ends, you can elect to pay the full remaining balance when you take interim occupancy, even if the contract says otherwise. Paying in full removes the interest, which is the biggest part of the fee.
But you must have that money without a mortgage, and the developer still holds title until registration. Ask your lawyer to confirm how the money is protected in trust before you choose this. The election must be made within the 10-day period, so raise it with your lawyer right after signing.
How long can it last?
We could not find a maximum period set by law. Section 79 of the Act requires the developer to take all reasonable steps to complete the building and register the declaration “without delay,” but it gives no number of months. The CAO buyers’ guide warns that occupancy fees can be thousands of dollars a month for the whole interim occupancy period, which can last a long time.
In a large high-rise, every floor must be finished and municipal inspections and registration completed, so buyers on lower floors who move in first often wait longest. Ask the developer and your lawyer for the expected timeline, and budget for the occupancy fee overlapping with rent or a mortgage on your current home.
There is one small protection after six months. If the fee includes a projected reserve fund contribution, then from the seventh month the developer must hold that portion in trust and hand it to the condo corporation at registration (section 80 (5)).
What you can and cannot do
- Live there: yes. You pay the fee whether or not you move in.
- Rent it out: section 80 (6) lets the developer withhold consent to an assignment of the right to occupy and charge a reasonable fee for consenting. Many pre-construction contracts ban renting during interim occupancy or require the developer’s consent. Read your contract and do not lease the unit without the developer’s written consent.
- Assign the contract: transferring your purchase agreement during interim occupancy usually also needs the developer’s consent and a fee. See “Assignment sale.”
- Renovate: the unit still belongs to the developer and Tarion warranty inspections are under way, so it is safer to leave flooring or wall changes until after final closing. Follow your contract and the developer’s instructions.
- Repairs and services: the developer must provide the services and repairs the condo corporation will provide after registration, and has the same right of entry the corporation will have (section 80 (6) (a)–(c)).
- Tenant law: certain parts of the Residential Tenancies Act (including rent increase rules) do not apply to interim occupancy and occupancy fees (section 80 (10)).
Final closing
When the developer registers the declaration and description, the condo corporation is created. Within 30 days of registration the developer must notify you in writing of the registration date and instrument numbers, or deliver the deed (section 80 (6) (f)). Your lawyer then completes the final closing: mortgage funds are advanced, you pay the balance, land transfer tax and closing costs, and the unit is registered in your name.
At that point the developer must refund any property tax you paid in the occupancy fee above what was actually assessed, and may collect the difference if you paid too little (section 80 (8)–(9)). Check this on your lawyer’s statement of adjustments. Your mortgage approval has to be in place for final closing, not interim occupancy, so plan for changes in rates or income in between.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
An agreement of purchase and sale may permit or require interim occupancy of a proposed unit. … “interim occupancy” means the occupancy of a proposed unit before the purchaser receives a deed to the unit that is in registerable form.In plain wordsThe purchase agreement may allow or require interim occupancy, which means living in the unit before you receive a deed that can be registered.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
If the purchaser assumes interim occupancy of a proposed unit or is required to do so under the agreement of purchase and sale, the declarant may charge the purchaser a monthly occupancy fee which shall not be greater than the total of the following amounts: 1. Where applicable, interest calculated on a monthly basis on the unpaid balance of the purchase price at the prescribed rate. 2. An amount reasonably estimated on a monthly basis for municipal taxes attributable to the unit. 3. The projected monthly common expense contribution for the unit.In plain wordsThe monthly occupancy fee cannot exceed the sum of: monthly interest on the unpaid price at the prescribed rate, an estimate of monthly property tax, and the projected monthly condo fees.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
The prescribed rate of interest for the purpose of paragraph 1 of subsection 80 (4) of the Act shall be the rate of interest that the Bank of Canada has most recently reported as the chartered bank administered interest rate for a conventional one year mortgage as of the first of the month in which the purchaser assumes interim occupancy of a proposed unit or is required to do so under the agreement of purchase and sale.In plain wordsThe interest part of the fee uses the Bank of Canada’s most recently reported chartered bank rate for a conventional one-year mortgage, as of the first of the month you take occupancy.
Source: ontario.ca/laws/regulation/010048 · checked Oct 30, 2026
Despite any provision to the contrary in the agreement of purchase and sale, before the expiry of the time period mentioned in subsection 73 (2) for rescinding the agreement, a purchaser may elect to pay in full, on assuming interim occupancy of the proposed unit, the balance of the purchase price remaining after deducting the amounts paid under the agreement before assuming interim occupancy.In plain wordsWhatever the contract says, before the 10-day cooling-off period ends a buyer may elect to pay the whole remaining price when taking interim occupancy, which removes the interest part of the fee.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
(d) may withhold consent to an assignment of the right to occupy the proposed unit; (e) may charge a reasonable fee for consenting to an assignment of the right to occupy the proposed unit;In plain wordsDuring interim occupancy the developer may refuse to let you hand the right to occupy to someone else (including a tenant), and may charge a reasonable fee if it agrees.
Source: ontario.ca/laws/statute/98c19 · checked Oct 30, 2026
During interim occupancy, a buyer cannot make mortgage payments until the condo corporation is registered with the Land Registry Office. The builder will advise buyers of their interim occupancy date as the condo building nears completion. On the interim occupancy date, buyers may take occupancy of their condo unit, but they do not own it yet.In plain wordsYou cannot start a mortgage until the condo corporation is registered. The builder tells you the interim occupancy date; from then you can live in the unit, but you do not own it yet.
Source: condoauthorityontario.ca/before-you-buy-or-rent-a-condo/buying-a-condo/pre-construction-condos/ · checked Oct 30, 2026
Interim occupancy fees can be thousands of dollars a month for the entire interim occupancy period which can last for an extended period of time.In plain wordsThe occupancy fee can be thousands of dollars every month for the whole interim period, and that period can last a long time. Plan for the cost.
Source: condoauthorityontario.ca/wp-content/uploads/2023/09/CAOs-Buyers-Guide_2025.pdf · checked Oct 30, 2026
Your one-year warranty begins on the date of possession (or occupancy date if a condominium) and includes items such as defects in work and material and unauthorized substitutions.In plain wordsFor a condo, the one-year Tarion warranty starts on the occupancy date, not at final closing. Record defects carefully at the pre-delivery inspection.
Source: tarion.com/homeowners/coverage-freehold-contract-condo-units-condo-conversions · checked Oct 30, 2026
Common questions
Is the occupancy fee credited toward the purchase price?
No. It is interest, an estimate of property tax and projected condo fees, not payment toward the home, which is why people call it phantom rent. The property tax estimate is reconciled with the actual tax at final closing (Condominium Act, section 80 (8)–(9)).
Can I skip interim occupancy and wait for registration?
It depends on your contract. Section 80 (1) says the agreement may “permit or require” interim occupancy. Most pre-construction contracts require it, and you pay the fee whether or not you move in.
Can I rent the unit out during interim occupancy?
Not without the developer’s written consent. Section 80 (6) lets the developer withhold consent to an assignment of the right to occupy and charge a fee for consenting. Many contracts ban leasing during this period. Read your contract and ask your lawyer.
Am I paying mortgage interest during interim occupancy?
No. Your mortgage starts at final closing. The interest part of the fee goes to the developer, at the Bank of Canada one-year mortgage rate set by regulation (O. Reg. 48/01, section 19 (1)), not at your own mortgage rate.
Do I get compensation if interim occupancy drags on?
Tarion’s delayed occupancy compensation applies when you get occupancy later than the promised occupancy date, not when the interim occupancy period itself is long. We found no statutory compensation for a delayed registration. Ask your lawyer whether your contract says anything about it.
What do I need for final closing?
A mortgage approval valid at the final closing date, the balance of the price, land transfer tax (apply for the first-time buyer refund if eligible), legal fees and the developer’s closing adjustments. The difference between the estimated and actual property tax paid in your occupancy fee appears on the statement of adjustments. See “Closing costs” and “Pre-construction deposit structure.”
Guides that use this term
Sources checked
- Condominium Act, 1998, ss. 73, 79, 80 (e-Laws) · checked Oct 30, 2026
- O. Reg. 48/01: General, s. 19 (Condominium Act regulation) · checked Oct 30, 2026
- CAO, Pre-construction condos · checked Oct 30, 2026
- CAO, Ontario’s Residential Condominium Buyers’ Guide 2025 (4.1 Interim Occupancy) · checked Oct 30, 2026
- Tarion, Condo Units: coverage for occupancy dates, delays & cancellations · checked Oct 30, 2026
- Tarion, Coverage for Freehold Contract, Condo Units & Condo Conversions · checked Oct 30, 2026