What is interim occupancy in a condo in Barrhaven, Nepean, Ontario?
As a condo buyer, if you're buying brand new construction, the closing is always a two-step process. As soon as the condo unit can be occupied, the builder usually requires a condo buyer to assume interim possession.
The final closing doesn't take place for at least several months after the condominium declaration is registered, and ownership of the units can be legally transferred to the condo buyers. It's not until the final closing that the property ownership is transferred to the buyer and the mortgage is registered.
During interim occupancy, a condo buyer pays common expenses, an estimate of the property taxes, and interest on the unpaid balance of the purchase price. You don't get a credit for these payments on the final closing so it's good to think of these occupancy costs as rental payments- similar to what you would pay as a tenant. Although some condo buyers would probably prefer to wait for the final closing than assume interim occupancy, this is not usually a choice open to a purchaser.
What about if you're an investor? During the period of interim occupancy period, a condo buyer is usually not allowed to have tenants occupying the unit. There's a portion of the standard Agreement of Purchase and Sale which prohibits having tenants during interim occupancy. This should be deleted if a condo buyer wants to commence a tenancy immediately upon taking possession. Most investors aren't going to want to let their unit sit vacant until the final closing takes place because you're paying an occupancy fee to the builder during this period.
Most standard builder's agreements will also prohibit you advertising or marketing a unit for lease in the building for a certain period of time. If the builder is still trying to sell their own units, having units advertised for rent isn't good for sales. A condo buyer would either want this provision deleted from the Agreement of Purchase and Sale, or else make sure that the builder has already sold all of their units.
This blog entry is intended as general information only and does not constitute legal advice. If you need legal advice, please speak to a lawyer.
Kerry Fox is a real estate lawyer helping condo buyers in Nepean, Ontario.