Do You ‘Close’ on a Pre-Construction Condo? The Two Closings Every Ontario Buyer Should Know

Quick Answer

Builder gives notice of occupancy

Interim occupancy · pay occupancy fee

Wait for condo registration (months)

Final closing · title transfers · mortgage funds

Real condo fees begin

Closing #1: Interim Occupancy

When your unit is finished, inspected by the municipality, and safe to live in, the builder gives you notice that you can take occupancy. You get the keys and move in — or rent the unit out. But note the catch: title is still in the builder’s name. You are an occupant, not an owner. The building has not yet been registered as a condominium corporation. Under the Condominium Act, 1998, title cannot be transferred to any buyer before that registration happens — which is why, in a high-rise, lower floors are often occupied while the whole tower registers later. That’s exactly why you can move in without holding a deed.

What You Pay During Occupancy: the Occupancy Fee (Phantom Rent)

Every month during interim occupancy you pay the builder an occupancy fee. It’s nicknamed ‘phantom rent’ because it pays down no mortgage principal and builds no equity — once it’s paid, it’s gone. Under section 80 of the Condominium Act, 1998, this fee can be made up of at most three components:

1) Interest — interest, at the prescribed rate (O. Reg. 48/01), on the unpaid balance of your purchase price, calculated monthly;
2) Estimated municipal taxes — the builder’s estimate of property taxes on the unit;
3) Estimated common expenses — the builder’s estimate of the future condo fees.

The Act prohibits builders from profiting on this fee — it can only cover the project’s carrying cost during this window, not a markup.

Why the Occupancy-to-Registration Gap Can Be Months

The gap between taking occupancy and final registration is commonly 3–6 months, and sometimes longer. The reason: the building has to reach a certain level of completion and clear surveying and municipal approvals before it can be formally registered as a condominium corporation in the land registration system. In a high-rise, lower floors are typically ready first while upper floors and common areas are still being finished, so the builder lets you occupy early and registers the whole tower once it qualifies. The longer that takes, the more occupancy fees you accumulate — a carrying cost unique to pre-construction.

Closing #2: Final Closing / Registration

Once the building is officially registered as a condominium corporation, the builder can transfer title to you. This is the day that actually feels like a ‘closing’:

· Title is registered in your name;
· Your mortgage funds and registers against title;
· The occupancy fee stops and is replaced by real condo fees paid directly to the condominium corporation;
· You go from occupant to owner — and equity finally starts building.

In other words, your mortgage doesn’t start the day you move in. It starts at final closing.

The Closing Costs Due at Final Closing

The bill on final-closing day surprises a lot of buyers. It typically includes:

· Land transfer tax (Ontario plus the Toronto municipal portion where it applies);
· Development levies / development charges — education, municipal, parkland and similar levies; if you didn’t have these ‘capped’ in your purchase agreement, this line can run several thousand to over ten thousand dollars;
· HST adjustments / rebate handling — investors who rent the unit out may face an HST rebate clawback;
· Tarion enrolment fee for the new-home warranty;
· Legal fees, title insurance, and statement-of-adjustment items (meter hookups, prepaid common expenses, etc.).

All-in, closing costs commonly land in the 3%–5% of purchase price range (on top of the price itself). Have your lawyer confirm whether the levies were capped before you sign.

When Tarion Warranty Coverage Starts

Your new-home warranty start date is tied to these two closings — and the unit warranty and the common-elements warranty start at different times:

· Unit warranty (1-year / 2-year / 7-year) — begins on the day you take occupancy, and you can file your first warranty form within your first 30 days of occupancy;
· Common-elements warranty (lobby, elevators, roof, mechanical systems) — begins when the condominium is registered, typically several months after occupancy.

According to Tarion (2025), keep these two timelines separate — especially the unit warranty’s 30-day and first-year reporting windows, which are easy to miss.

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