Ontario Pre-Construction Final Closing: Complete Process & Pitfall Guide

Don’t rush to sign on closing day. Insist your lawyer send the statement of adjustments 48 hours in advance for your review.

What’s the difference between Interim Occupancy and Final Closing?

Interim Occupancy is stage one of pre-construction closing — the building is complete but condo registration isn’t done yet. You get keys and move in, but title is still with the builder and you pay monthly occupancy fees. Final Closing is the actual title transfer — condo registration completes, ownership transfers to you, your mortgage funds, HST is settled, and all closing costs are paid in one shot. The gap between the two is typically 6–18 months, during which you cannot sell the unit to a third party because you don’t legally own it yet.

What is the Occupancy Fee — can I skip it?

The Occupancy Fee is the monthly payment to the builder during interim occupancy. Three components: (1) interest on the unpaid balance × Bank of Canada 5-year rate; (2) estimated condo maintenance fees; (3) estimated property tax. None of this money goes to mortgage principal, the home price, or condo reserve fund — and it isn’t tax-deductible unless you’re renting it out. Skipping it triggers default: the builder can keep your deposit (10–20%) and sue. Legally there’s no way around it — but you can shorten the occupancy period: request early final closing or assign to a third party (mind the HST implications).

What does a PDI (Pre-Delivery Inspection) actually check?

The PDI is Tarion’s mandatory pre-occupancy inspection, usually 7–30 days before move-in. Check: (1) every appliance powers on and runs; (2) plumbing/electrical/HVAC functional; (3) paint/floors/cabinetry/tile free of defects; (4) windows/doors/balcony intact; (5) HVAC working in both heat and cool modes. Every issue must be written into the Tarion Certificate of Completion and Possession (CCP). The 30-day form and 1-year form are the follow-up windows for catching missed defects. Hiring a professional inspector ($300–$500) typically uncovers 20–50 issues vs. 5–10 if you go alone. A thorough PDI runs 2–4 hours.

What does Tarion warranty cover?

Tarion is Ontario’s government-backed new home warranty, structured in three tiers: (1) 1-year warranty — all manufacturing and material defects (appliances, tile, paint, HVAC); (2) 2-year warranty — major systems including electrical, plumbing, heating, exterior windows; (3) 7-year warranty — major structural defects (foundation, load-bearing walls, roof structure). All condo developers must now be registered with HCRA (Home Construction Regulatory Authority). Note: builder upgrades and cosmetic damage from move-in are not Tarion-covered.

How much cash do I need on Final Closing day?

Beyond the purchase balance, the main closing costs are: (1) Land Transfer Tax (LTT) — both Ontario and Toronto LTT inside the 416, roughly 2–4% combined; (2) Net HST (after NHR/NRRR rebate); (3) Development Charges / Education Levies — typically $10,000–$25,000, with a cap normally written into the APS; (4) Tarion Enrollment Fee — one-time $400–$1,500; (5) Legal fees $1,500–$3,500; (6) Statement Adjustments (utility deposits, prorated maintenance); (7) Title Insurance $400–$800. For a typical $700K pre-construction unit, final closing day requires $40,000–$80,000 in cash, excluding mortgage down payment.