What is Interim Occupancy

Interim occupancy, also known as interim closing or interim possession, is a term used in real estate transactions, particularly in the context of buying a new condominium (condo) from a developer before the condo project is officially registered and fully completed. Here’s how it typically works and how it affects condo buyers:

        Definition and Process:

• Interim Occupancy: This is the period between when the buyer takes possession of their unit and when the condo project is registered with the local municipality and the title is transferred to the buyer.

• During this period, the buyer can occupy and live in the unit but does not legally own it yet. Instead, the developer retains ownership.Financial Implications:

• Occupancy Fees: During interim occupancy, the buyer pays an occupancy fee to the developer. This fee covers the estimated monthly costs of the unit, including maintenance fees, estimated property taxes and interest, but it does not include mortgage payments on the unit. These costs are estimated by the builder however, the builder does not benefit financially.

• These fees are typically lower than mortgage payments but can still be significant and are not building equity in the property for the buyer.Timing and Completion:

• The length of interim occupancy can vary. It ends when the condo is registered, and the title is transferred to the buyer. At this point, the buyer finalizes their mortgage and begins making regular mortgage payments.Legal Considerations:

• Since the buyer does not own the unit during interim occupancy, they do not have voting rights in the condo corporation or the ability to rent out the unit.Risks and Considerations for Buyers:

• Delays: There is a risk of delays in the completion and registration of the condo project, which could prolong the interim occupancy period.

• Interest Rates: During this period, interest rates could change, potentially affecting the buyer's mortgage terms when the final closing occurs.

• Changes in Plans: Sometimes, there may be changes in the condo project's final specifications or design between the interim occupancy period and the final closing, though these are typically rare.

        Advantages:

• Interim occupancy allows buyers to move into their unit sooner rather than waiting for the entire project to be completed and registered.

• It gives buyers time to settle into the unit and make arrangements for the final closing and mortgage.

In summary, interim occupancy can be beneficial as it allows for early occupancy of the unit, but buyers need to be aware of the financial implications and risks associated with this period, including occupancy fees and potential delays in finalizing ownership. Buyers should carefully review their purchase agreements and consult with legal and financial advisors to understand their rights and obligations during interim occupancy.