Pre-Construction Condo Closing, Start to Finish: Interim Occupancy, PDI, and Final Closing
Don’t wait until closing day to panic — know every step of these three stages in advance
How does closing on an Ontario pre-construction condo actually work, and why am I living there before I own it?
Pre-construction closing happens in three stages, not one. According to Tarion, first comes interim occupancy: the building is finished but the condo corporation isn’t registered yet, so you move in and pay ‘occupancy fees’ to the builder while the builder still holds title. Then the PDI (Pre-Delivery Inspection), a Tarion requirement, documents the unit’s defects. Only once the condo corporation is registered do you reach final closing — paying the balance and taking title.
Source: Tarion (Pre-Delivery Inspection; Warranty Outline); Ontario Condominium Act mechanics.
Most people obsess over price and floor plan when they sign a pre-construction deal, then get blindsided at closing: Wait, I have to ‘move in’ first? What’s an occupancy fee? What do I even look for on inspection day? These are decisions worth tens of thousands of dollars, and improvising on the spot costs you. Here’s the whole process broken into three stages, so you know what to do and what to pay six months ahead of time.
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Stage 1: Interim occupancy and occupancy fees
The building is done, but the condo corporation for the whole complex isn’t registered with the government yet — so your unit has no separate title to transfer. The builder lets you take ‘interim occupancy.’ During this period you pay a monthly occupancy fee made up of three parts: interest on the unpaid balance of the purchase price, an estimate of the unit’s property taxes, and an estimate of the common-expense (condo fee) contribution. Note: the occupancy fee is not a mortgage payment — it does not reduce your principal.
Know how long and how much you’ll pay
⚠️A problem you spot on PDI day that isn’t written on the form may as well not exist. No matter what the builder verbally promises to ‘fix later,’ insist it goes in writing on the PDI form.
Stage 2: The Pre-Delivery Inspection (PDI)
Bring these to inspection day
💡 Remember one key distinction: your unit’s PDI does not cover the common elements. The lobby, gym, hallways, and roof are inspected separately by the condo board with the builder, and their warranty clock starts on the date the corporation is registered — not your possession date. Two independent warranty timelines.
Stage 3: Final closing and the Tarion 1-2-7 warranty
Once the condo corporation registers, your unit finally has its own title, and you reach final closing: pay the balance plus the statement of adjustments, and title transfers to you. The Tarion new-home warranty structure is: one year (free of defects in work and materials, meets the Building Code), two years (water penetration, electrical/plumbing/heating delivery defects, and more), and seven years (Major Structural Defects).
Watch the ‘statement of adjustments’ before final closing
ℹ️In 2026 the federal and Ontario governments announced an enhanced HST rebate on newly built homes, but confirm the exact eligibility and dollar cap on canada.ca / ontario.ca — details on new policy like this change fast, so don’t act on second-hand figures.
Frequently Asked Questions
Does my occupancy fee count toward my mortgage principal?
No. The occupancy fee is closer to rent — it does not reduce your purchase price. It’s made of interest on the unpaid balance, an estimate of property tax, and an estimate of the common-expense contribution, and it’s an extra cost during interim occupancy.
I can’t read an inspection myself — can I bring a home inspector to the PDI?
Yes, and you should. Many buyers bring a professional inspector to the PDI, especially for plumbing, electrical, and HVAC that aren’t obvious to the eye. The fee is trivial next to the price of the unit and helps catch defects you’d miss.
Why is the common-element warranty period different from my unit’s?
Because the common elements are held by the condo corporation, and their 1-2-7 year warranty starts on the corporation’s registration date; your unit’s warranty starts on your possession/closing date. Two independent clocks — that’s the Tarion rule.
Can development levies actually be negotiated?
Yes, but you negotiate them at signing. They’re a contract term, not a legal obligation, so you can have your lawyer add a cap clause to the purchase agreement (APS) limiting what the builder can pass through at closing. Discovering it at closing is too late.
Discover more from GTA Real Estate Broker | Arthur Zhao
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