Interim Occupancy Fees in Ontario: What You Pay Before Your New Condo Is Registered

One of the most confusing stages of buying a new condo is the period between moving in and actually owning the unit. In Ontario this is called interim occupancy. You get the keys and live in the suite, but the condominium has not yet been registered, so title cannot transfer and your mortgage has not started. During that time you pay the builder a monthly occupancy fee. Buyers are often surprised by how long this lasts and by the fact that the money does not reduce their purchase price. This guide explains how it works.

Why interim occupancy exists

In a high-rise building, units are often ready to live in before the whole building is finished and before the condominium corporation can be registered with the land registry. Rather than leaving finished units empty, builders let buyers move in under an occupancy arrangement. Final closing, when ownership transfers and your mortgage funds, happens after registration. The gap can be a few months or longer, depending on the project.

What the occupancy fee covers, and its legal limit

The Condominium Act, 1998 limits the monthly occupancy fee to the total of three items (Condominium Authority of Ontario, Condo Buyers' Guide, accessed October 2026):

1. Interest on the unpaid balance of the purchase price.
2. A reasonable estimate of municipal realty taxes for the unit, on a monthly basis.
3. The projected monthly common expense contribution for the unit, essentially the estimated condo fee.

The interest rate used is set by regulation by reference to the Bank of Canada's reported rate for a conventional one-year mortgage as of the first day of the month the occupancy begins (ontario.ca, O. Reg. 48/01, accessed October 2026). The builder cannot charge more than the legal total.

Why it feels like "dead money"

Occupancy fees are similar in size to what a mortgage payment plus fees and taxes would be, but none of the fee goes toward your purchase price or builds equity. It is closer to rent. That is the part that catches buyers off guard, especially if registration is delayed. Budget for occupancy as an added cost of buying new, not as a substitute for mortgage payments.

A simple example

Suppose you are buying a $700,000 unit in Vaughan and have paid $140,000 in deposits, leaving an unpaid balance of $560,000. If the prescribed interest rate were 6%, the interest portion would be roughly $2,800 a month. Add an estimate for realty taxes and the projected condo fee, and the total occupancy fee might be well over $3,000 a month. These numbers are illustrative only; your agreement and the rate in effect when your occupancy starts will set the real amount.

What else to know during occupancy

• Insurance: you will generally need tenant-style contents and liability insurance during occupancy, then switch to unit-owner insurance on final closing.
• Utilities: check whether hydro, water or other services are billed to you separately during occupancy.
• PDI and warranty: your pre-delivery inspection happens before occupancy, and your Tarion warranty forms are generally tied to the date of possession. Our Tarion warranty and PDI guide explains the deadlines.
• Renting it out: many agreements restrict leasing during interim occupancy. Read the agreement before you plan on rental income.
• Final closing costs: on final closing you pay the balance of the price, land transfer tax and any adjustments in the agreement. Our post on land transfer tax for first-time buyers covers the tax side.

How to prepare

Before signing a pre-construction agreement, ask how the builder handles interim occupancy, what the expected occupancy date is, and how much of the unpaid balance will bear interest. Ask your mortgage professional how the mortgage commitment will work if final closing comes months after occupancy, since rates and your circumstances can change. And keep a cushion in your budget for a longer-than-expected occupancy period.

If you may need to sell before final closing, read our guide on pre-construction assignments and HST, which also mentions how interim occupancy affects timing.

Common questions during occupancy

Can the builder raise the occupancy fee? The fee is tied to the legal formula, so it can change if the realty tax estimate or common expense projection changes, but it cannot exceed the legal total. Your agreement will explain how adjustments are made.

What happens to the realty tax portion? The estimated taxes you pay during occupancy are typically reconciled at final closing against the actual assessment, and you may owe or be credited a difference. New units often receive supplementary tax bills after registration, sometimes covering earlier months.

Who handles repairs? The builder still owns the unit during occupancy, so warranty and deficiency repairs are handled by the builder. Report issues in writing and keep records, and follow the Tarion form deadlines.

What if registration is delayed for a long time? Delays happen for many reasons, including construction of other parts of the building and approvals. Your occupancy continues, and your fees continue. The Tarion addendum to your agreement sets rules for delayed occupancy and closing dates; ask your lawyer how they apply to your situation.

A budgeting tip

When you plan your finances for a new condo, add a line for occupancy fees for at least several months, plus moving costs, furniture and insurance. Buyers who budget only for the final mortgage payment are the most likely to feel stretched during this phase. Building in a realistic cushion makes the transition from occupancy to ownership far less stressful.

Final closing is the moment occupancy ends. Your lawyer registers the transfer, your mortgage funds, the balance of the price is paid and the unit becomes legally yours. From that date, you pay your mortgage, condo fees and taxes directly, and occupancy fees stop.

Frequently asked questions

What is interim occupancy in Ontario?

It is the period when you live in a new condo unit before the condominium is registered and ownership transfers to you.

What can a builder charge as an occupancy fee?

Under the Condominium Act, the fee is limited to interest on the unpaid balance, a reasonable estimate of monthly realty taxes, and the projected monthly common expenses.

Does the occupancy fee go toward my purchase price?

No. It does not reduce the price or build equity; it works more like rent.

How is the interest rate for occupancy fees set?

By regulation, using the Bank of Canada's reported rate for a conventional one-year mortgage as of the first day of the month occupancy begins.

General information only, not legal, tax or financial advice. Figures were checked against the sources linked above in October 2026 and can change; confirm your own numbers with your real estate lawyer, accountant or lender before you sign anything.

Farshad Fazaeli, Salesperson, International Realty Firm, Inc., Brokerage, 647-667-5555 · Richmond Hill, ON