According to Urbanation's Q1 - 2020 report, there are approximately 29,500 units scheduled for completion this year. The condominium data research firm also indicates that this number is double the amount of completions met in 2018, and will far surpass the previous high set in 2014 at 21,000 units. So, it is likely that if you are reading this, you are among the number of buyers who will be experiencing interim occupancy and potentially final closing this year.
These two phases in your journey to ownership can be challenging to navigate, so, we've not only provided you with a video to explain some of the most important aspects of this period of time, but we also break down what is expected of you during your interim occupancy phase and final closing. Yes, that's right. This period of time is essential too!
Now that you know what each phase entails, here's what is expected of you: the buyer and investor.
During the interim occupancy phase and prior to final closing, you will pay occupancy fees to the developer. These fees will not be allocated to payments due at the final closing.
These occupancy fees are a monthly amount calculated from:
1. The estimated common expenses for the unit per month.
2. The estimated property taxes per month for the unit.
3. The interest on the outstanding balance of the purchase price. (For example, if the purchase price is $350,000.00 and the buyer has paid deposits of $50,000.00, the outstanding balance is $300,000.00. The interest is the Bank of Canada's 1-year conventional mortgage rate for the month that the buyer takes possession. If the interest rate is 3%, the interest payable is $750.00 per month).
Therefore, the monthly occupancy fee in this example would be $200.00 (estimated common expenses) plus $300.00 (estimated monthly property taxes) plus $750.00 (interest on the outstanding balance), for a total of $1250.00 per month. Any other costs that are the responsibility of the buyer, such as utilities and home insurance, would be added to this amount.
If you want to avoid paying the interest on the outstanding balance of the purchase price, you will have to notify the developer within the "10-day cooling period" after signing the agreement. This is your opportunity to let the developer's representative know that you will be providing the remainder of the purchase price in cash at the interim closing date, and will not be needing a mortgage. If you plan to provide the remainder of the purchase price, you will only have to pay the estimated property taxes and the estimated common expenses per month in occupancy fees.
In the Agreement of Purchase and Sale, the developer will stipulate that once the unit is ready to be occupied, you must complete interim closing and begin paying occupancy fees. At this time, you will not be able to defer until the final closing in order to avoid paying occupancy fees altogether.
As mentioned in our video above, once the condominium has been declared and registered with the Land Registry Office, you can receive title to the unit you've purchased, through the final closing. This will require the payment of the balance of the purchase price, as well as any adjustments.
Further to your successful transaction, a week after your closing date, you will also receive an email from your lawyer with the final report and supporting documents prepared for your records and informational purposes only.
And that's it! Now you are the owner of a beautiful, newly built condominium suite.