April 1, 2020

How To Prepare For Your Condo's Occupancy And Closing

Ryan Coyle

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A condo you bought going into occupancy soon? 


This is understandably an exciting time, but if you have any questions on how to prepare for it, then you have come to the right place! We can guide you though step-by-step process to make sure you are fully prepared for it.

Steps to Prepare For Occupancy/Closing of Your Condo

1. The first step is to decide the direction you want to take - lease it, sell it or move in? 

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What You Need To Know About Occupancy

Interim occupancy is a unique concept in Ontario's condo market, occurring between unit completion and condominium registration, usually lasting one to six months. During this time, your unit may be ready, but the rest of the property could still be under construction.


2. You'll start paying occupancy fees to the builder based on your occupancy closing date. It's like rent during this transition.

The fee has three parts, all governed by the Condominium Act:

  • Condominium fee: Covers the condo's utilities cost
  • Estimated Realty Taxes: the expected realty taxes for your unit
  • Unpaid balance of the original purchase price

For example, if you purchased a unit for $500,000 and made a down payment of 20%, the unpaid balance would be $400,000. There's also an interest rate involved, typically based on the one-year Bank of Canada mortgage rate, which is currently around 7.5% (subject to change).

Note: You can put more money down on occupancy, which in return will reduce your occupancy fee.

What Documents You Need To Prepare For Occupancy?

Post-Dated Cheques - These cheques are to cover your occupancy fee. If you don't have cheques ready available, we recommend ordering them from your bank to ensure a smooth payment process.

It's crucial to understand that the occupancy fee is essentially rent to the builder and is not credited to you upon closing. However, once you have tenants in your unit, the rent you receive can help offset the occupancy fee.

Insurance - The builder might ask for insurance covering the unit's contents and liability

The timing of key information can sometimes be tight. Typically, you'll receive details about the exact amounts you owe, such as the unpaid balance, only about a week before your closing date. This means that things can move quickly, and we'll need your post-dated cheques and other necessary documentation promptly.

Mortgage Letter - The builder might request a mortgage commitment or a pre-approval letter from your bank, so it's advisable to have this ready in case it's needed

3. Handling HST payments during new construction.

After the interim occupancy period, which could typically span six months, the builder will notify you about your upcoming final closing date. This notice typically comes about 30 days in advance. To ensure a smooth transition, it's vital to start the mortgage approval process soon after your interim closing. This allows you to secure favorable interest rates and have everything prepared well in advance.

Closing Costs & Adjustments on Final Closing

Closing Costs and Adjustments - A week before your final closing, the builder's lawyer will send you the crucial details: purchase price, deposits, and closing costs. These costs include items like development charges, park levies, realty taxes Tarion warranty fees, and utility meter charges, all listed in the statement or adjustments.

After final closing, you can apply to the CRA for your HST rebate, which can take up to 120 days. You'll need to provide a one-year lease agreement with a tenant and provide a few other documents to qualify for the rebate.

HST Rebate for Investors: For most of you, as investors, there's an important consideration - the HST rebate. You'll need to pay an additional $24,000 in HST on top of the purchase price. This extra cost arises because the way these properties are advertised typically assumes that you'll be living in the unit, even though most of you are investors.

We're here to help you maximize your condo investment returns. Connect.ca offers full-service real estate solutions; buying pre-construction condos, selling resale or assignments and property management to make investing in real estate as simple as investing in mutual funds. Find out more by filling out this form here.

Pre-Delivery Inspection

- Pre-Delivery Inspection (PDI) happens before occupancy closing.

- During PDI, you view your unit, usually finished with minor touch-ups left.

- City issues occupancy permit when the unit is deemed fit.

- Minor, non-critical issues addressed via Tarion warranty.

- We emphasize attending PDI in person.

- If unavailable, we offer a proxy service to ensure no detail is overlooked.


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