Blog > What is the difference between occupancy and closing in Ontario?
What is the difference between occupancy and closing in Ontario?
In an Ontario pre-construction condominium there are two dates, not one. At interim occupancy you move in but do not own the unit, because the condominium corporation has not yet been registered. During that period you pay a monthly occupancy fee made up of three things: interest on the unpaid balance of the purchase price, estimated municipal property taxes, and projected common expenses. None of it builds equity and none of it reduces the purchase price. At final closing, after the corporation is registered, title transfers, your mortgage funds and land transfer tax becomes payable. Tarion's delayed occupancy compensation is $150 per day to a maximum of $7,500, with an extra $1,500 if the builder fails to give proper notice.
The Single Most Expensive Misunderstanding in Pre-Construction
Buyers sign an agreement, see an occupancy date, and plan their lives around it as though it were a closing date. It is not.
Interim occupancy is the period when the building is finished enough for people to live in but the condominium corporation has not yet been registered with the Land Registry Office. Ownership can only transfer once that registration happens. Until then a buyer lives in the unit as an occupant, not an owner.
This period routinely runs for months. On a large phased project it can run longer. The occupancy fees paid during it are, from a wealth-building point of view, rent.
Michael John Lau, a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region, walks buyers through this before they sign rather than after, because it is the part that most often produces an unpleasant surprise eighteen months later.
The Two Dates, Side by Side
| Interim occupancy | Final closing | |
|---|---|---|
| Can you live there? | Yes | Yes |
| Do you own it? | No | Yes |
| Is title in your name? | No | Yes |
| Has the condo corporation been registered? | No | Yes |
| Does your mortgage fund? | No | Yes |
| What do you pay monthly? | Occupancy fee | Mortgage, taxes, common expenses |
| Does the payment build equity? | No | Yes, through principal |
| Land transfer tax payable? | No, title has not transferred | Yes |
| Can you sell it? | Only by assignment, with builder consent | Yes |
What the Occupancy Fee Is Made Of
Ontario's Condominium Act limits the occupancy fee to the total of three components. A builder cannot charge more than this.
- Interest on the unpaid balance of the purchase price, calculated at the Bank of Canada's reported rate for a one-year conventional mortgage. This is usually the largest component by a wide margin.
- Estimated monthly municipal property taxes, reconciled at final closing.
- Projected monthly common expenses, taken from the budget in the disclosure package.
The first component is the one worth understanding. You are paying interest on money you have not borrowed yet, to a builder, against a unit you do not own. It functions like a mortgage payment that is all interest and no principal, and it is not deductible for a buyer living in the unit.
The plain version: the balance does not go down, and no equity is being built.
The Protections Buyers Should Know
The 10-day rescission period
Under Ontario's Condominium Act, a purchaser has a 10-day cooling off period in which the agreement can be rescinded. The clock starts on receipt of the disclosure statement together with Ontario's Residential Condominium Buyers' Guide, not on the day the agreement was signed.
That distinction matters. Ten days is enough time for a lawyer to read the agreement properly, and that review is the single highest-value thing a pre-construction buyer can do.
Tarion delayed occupancy compensation
- $150 per day of delay
- Maximum $7,500
- Covers living expenses at that fixed daily rate, plus direct costs such as additional moving and storage with receipts
- An additional $1,500 if the builder fails to give 10 days' notice of a delay
- The builder must give 90 days' written notice to change a firm occupancy date
- Claims must be made to the builder within 180 days of the occupancy date, and to Tarion within the first year of possession
Deposit protection
Deposits are protected up to $20,000 under the Ontario New Home Warranties Plan if not refunded by the builder. Buyers putting down more than that should ask their lawyer how the balance is protected.
The Closing Costs Nobody Budgets For
Pre-construction closings carry costs a resale closing does not.
- Development charge adjustments. Builders commonly pass increases through to buyers at closing. The critical question is whether the agreement caps them. There is no standard cap; it is negotiated builder by builder, and an uncapped clause is an open-ended liability.
- Tarion enrolment fee
- Utility connection and meter installation charges
- Your own lawyer's fees, and often a contribution to the builder's legal costs
- Reserve fund contribution
- Common element contribution, frequently around two months of fees
- Land transfer tax, payable at final closing
To show why the development charge clause deserves attention, Markham's own 2026 development charge schedule is substantial. For a single or semi-detached unit the City-wide charges are roughly $41,890 plus $36,117, with York Region adding about $92,834 and school boards more again. For a large apartment of 700 square feet or more, the City-wide charges are roughly $25,555 plus $22,037, with York Region around $59,939.
These are levied on the builder, not billed directly to the buyer. They matter here because an uncapped pass-through clause exposes a buyer to movements in numbers of that size.
Assignment: Selling Before You Own
Buyers who need out during interim occupancy generally have one route, and it is more restricted than most expect.
- The builder's written consent is almost always required. Assigning without it risks breach and cancellation.
- Assignment fees range from a few hundred to several thousand dollars, set by the builder.
- Most builders prohibit marketing an assignment on MLS or public websites. Breaching that can mean cancellation and deposit forfeiture.
- Some builders only permit assignment after a sales threshold or a set date.
- Many agreements allow only one assignment.
- HST applies to assignment profit on new housing, and the profit may be taxed as a capital gain or as business income depending on circumstances.
Questions about your own property or timeline? Call Michael John Lau, REALTOR®, at (416) 700-0286 for a direct answer on your street and your situation.
What Michael Tells Pre-Construction Buyers
- Use the 10 days. Have a real estate lawyer read the agreement inside the rescission period. Not a friend, not a summary, a lawyer.
- Ask what the occupancy fee will be, in dollars, and how long interim occupancy is expected to run. Budget for it as an additional carrying cost, because that is what it is.
- Find the development charge clause and ask whether it is capped. If it is not, ask for a cap.
- Read the assignment clause before you need it, not when you need it.
- Note the occupancy date in the agreement, which is the date Tarion measures delay against. Marketing dates are not contractual dates.
- Plan for two sets of costs, one at occupancy and one at final closing.
Frequently Asked Questions
What is interim occupancy in Ontario?
It is the period when a buyer moves into a new condominium unit before the condominium corporation has been registered. During it, the buyer lives in the unit but does not own it, because ownership can only transfer once the corporation is registered with the Land Registry Office.
What is an occupancy fee made up of?
Three components, and by law it cannot exceed their total: interest on the unpaid balance of the purchase price at the Bank of Canada's reported one-year conventional mortgage rate, estimated monthly municipal property taxes, and projected monthly common expenses from the disclosure budget.
Do occupancy fees go toward the purchase price?
No. Occupancy fees do not reduce the balance owing and build no equity. Functionally they are rent paid to the builder while living in a unit you do not yet own.
When do I pay land transfer tax on a pre-construction condo?
At final closing, when title actually transfers, not at interim occupancy. Because ownership does not transfer at occupancy, the tax is not triggered then. Buyers should have their lawyer confirm the treatment for their specific transaction.
What compensation applies if the builder delays occupancy?
Tarion provides $150 per day to a maximum of $7,500, covering living expenses at that daily rate plus direct costs such as additional moving and storage with receipts. An additional $1,500 applies if the builder fails to give 10 days' notice of a delay.
Can I sell a pre-construction condo before closing?
Only by assignment, and almost always only with the builder's written consent. Builders charge assignment fees, usually prohibit public marketing of the assignment, sometimes allow only one assignment, and may restrict when assignment is permitted. HST applies to assignment profit on new housing.
Signing a pre-construction agreement?
Michael John Lau explains the full pre-construction timeline before an agreement is signed, because the ten days after signing are when a buyer has the most protection and the least information.
Michael John Lau, REALTOR® · Markham, Ontario · (416) 700-0286
Disclaimer. Michael John Lau is a licensed REALTOR® serving buyers and sellers in Markham, Ontario and the Greater Toronto Area. Details are current to September 2026 and reflect the Condominium Authority of Ontario, Tarion and the City of Markham's 2026 development charge schedule. Michael John Lau is not a lawyer and this article is general information rather than legal or tax advice. Interest rates, compensation amounts and development charges change, and every builder agreement differs. Buyers should retain a real estate lawyer to review their agreement within the 10-day rescission period.