Typically when you purchase a pre-construction condominium here in Ottawa you will be given two different dates, the interim occupancy date and the closing date. Let's try and explain the difference between the two and what how exactly they come up with the fee amount.
The Closing Date and Interim Occupancy?
The closing date is when the ownership of the condominium unit is registered and transfered over to the buyer (you) from the builder. This registration cannot take place until all the units in the condominium building have reached a degree of construction (as set out in the regulations of the Condo Act). However, before the building is registered many of the units will be substantially complete and will already have obtained the occupancy permits from the city. This allows the builder to move the owners in, without the owner having ownership of the unit. It is standard for a developer to require the buyer to take occupancy before the buyer gets ownership, and will be written out in the agreement of purchase and sale.
Section 80(4) of the Condo Act allows a developer to charge a monthly occupancy fee to the buyer upon occupancy of the condo unit. The monthly fee may include;
- Interest on the balance of the purchase price at the rate of interest that the bank of Canada has most recently reported as the chartered bank rate for a conventional one year mortgage rate.
- An amount reasonably estimated (on a monthly basis) for municipal taxes, for that unit.
- The projected monthly common expenses contribution, for that unit.
Essentially it is roughly what you would be paying, but just to the builder. None of these fees goes against your mortgage, property taxes etc. Keep in mind that you are not the legal owner of the condo unit yet, and there is no condo corporation to pay any fees to.
Your Rights During Occupancy
During the interim occupancy period, the developer has a number of rules (as per section 80(6) of the Condo Act) that they have to follow and that the buyer must follow. These include:
- The developer shall repair and maintain the property and the unit in the same manner as the future condo corporation, which will maintain the building and units after registration of the corporation.
- The developer may withhold consent to an assignment of the right to occupy the unit.
- The developer may charge a reasonable fee for consenting to any assignment of the occupancy.
- The developer must (within 30 days of registration), notify the buyer in writing of the date and information of the registration, (unless the buyer receives a registrable deed to the unit).
- The buyer is able to pay the entire balance of the purchase price, on the date of interim occupancy, in order to reduce or eliminate the interest component of the monthly occupancy fee that the developer can charge.
Do you have a specific question about occupancy and interim occupancy fees? I would love to chat!