Understanding the Occupancy Closing
If you have purchased a brand-new condominium from the builder, it is likely that your pre-construction builder Agreement of Purchase and Sale will provide for two closings – an interim occupancy closing and following that, a final closing. This column will examine the interim occupancy closing.
The interim occupancy closing is the date when you obtain possession of the property. You do not become the registered owner of the property until final closing. In between the interim and the final closing, you have the right to occupy the unit, however, you cannot sell it or make any modifications to the unit as you are not the registered owner. The time period between interim and final closing is usually several months, but can vary depending on how quickly the builder completes the rest of the units and common elements and registers the documents creating the Condominium Corporation.
On the interim occupancy closing, you will need a lawyer to facilitate the closing and you will be required to provide the builder a series of post dated cheques for the interim occupancy fees. These monthly occupancy fees are comprised of the common expenses, the estimated property taxes and the interest on the unpaid balance of the purchase price. The occupancy fees will be paid until the final closing date which is set by the builder once the Condominium Corporation has been legally created. Once the final closing takes place, the occupancy fees will no longer be charged by the builder as you will have to pay the builder the balance of the purchase price and you will become the registered owner.
In addition to providing cheques for the monthly occupancy fees on the interim closing, you will also be required to set up your utility accounts and obtain insurance for your unit. Prior to obtaining the key on the interim occupancy closing, you will meet with your builder to do a predelivery inspection to identify any deficiencies and/or missing items in the unit. It is important to note that it is not uncommon for both the unit and common elements such as hallways and lobbies to be completely unfinished on the interim occupancy closing date.
Many buyers that they are required to have their mortgage financing in place on the interim closing date. This is incorrect as the mortgage financing and registration does not happen until the final closing. However, some builders will require on the interim occupancy closing date , a mortgage commitment or evidence that you can complete the transaction on the final closing date.
Finally, the builder is permitted to extend the occupancy closing date if the buyer receives proper written notice of the extension. If the buyer is not given proper notice of the extension, the buyer may be entitled to seek compensation under the terms of the Ontario New Homes Warranties Plan Act (Tarion).
Article Provided by Isenberg and Shuman