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Summary: Interim occupancy is the stretch between moving into a new condo and owning it. Section 80(4) of the Condominium Act, 1998 caps the monthly occupancy fee at three things: interest on your unpaid balance, estimated municipal taxes, and projected common expenses.
What is an interim occupancy?
An interim occupancy is the period when you live in a new condo unit that you do not yet legally own. The Condominium Act, 1998 defines it as occupancy of a proposed unit before you receive a deed to that unit in registerable form.
The gap exists because two things happen on different days. Your unit becomes fit to live in when the municipality issues an occupancy permit; it becomes something that can be owned only when the declaration and description are registered.
So you move in as an occupant, holding keys but not title. It is the same split between a possession date and a closing date that resale buyers see, stretched over months.
What does interim closing mean?
Interim closing is the transaction that starts your occupancy period. Your lawyer reviews the builder's interim statement of adjustments, confirms the occupancy fee calculation, and arranges the insurance your agreement requires. You take possession without title.
Nothing about ownership moves: no land transfer tax is payable and no mortgage is registered. Title, mortgage, tax, and rebates all land at final closing, covered in our guide to closing on a pre-construction condo.
What are the three parts of an occupancy fee?
Section 80(4) of the Condominium Act, 1998 says the monthly occupancy fee "shall not be greater than the total of" three amounts. There is no fourth line, so anything else on your statement deserves a question.
Interest on the unpaid balance of the purchase price. Calculated monthly at a rate the regulation prescribes, not one the builder picks. Usually the largest of the three by far.
An amount reasonably estimated for municipal taxes attributable to your unit. An estimate, and one the Act requires to be trued up later.
The projected monthly common expense contribution for your unit. The building runs elevators, insurance, cleaning, and staff from the day people move in, whether or not a condo corporation exists yet.
The tax line sends people looking for answers, because paying tax on something you do not own feels wrong. The reason is mechanical: the municipality taxes the land and building as soon as they are occupiable, but individual units have no tax accounts until registration creates them.
One bill covers the whole property, the builder pays it, and each occupant carries an estimated share.
Because it is an estimate, the Act reconciles it. Section 80(8) requires the builder to refund whatever you paid toward municipal taxes above what was actually assessed against your unit. Section 80(9) lets the builder bill you if the estimate ran low. Keep every statement, since that refund is calculated from them.
Why doesn't your occupancy fee reduce your purchase price?
Your occupancy fee does not reduce your purchase price, because none of the three components is a payment toward the price. The price is settled at final closing out of your deposits and your mortgage advance.
The frustration is reasonable: unlike a mortgage payment, no part of it quietly builds equity.
Occupancy fee | Rent | Mortgage payment | |
What it covers | Interest, estimated taxes, projected common expenses | Use of someone else's property | Interest plus principal |
Set by | The section 80(4) formula | The lease | Your lender |
Builds equity | No | No | Yes, through principal |
Any of it refundable | Yes, the tax overpayment under s. 80(8) | No | Not applicable |
Governed by | Condominium Act, 1998 | Residential Tenancies Act, 2006 | Your mortgage commitment |
Section 80(10) is explicit that key parts of the Residential Tenancies Act, 2006 do not apply to interim occupancy, including the Part VII rent rules. You are not a tenant, so rent increase limits are unavailable, and not yet an owner, so ownership benefits are unavailable too.
That in-between status is why the money feels like it disappears. The tax component does reconcile; interest and common expenses are genuinely spent.
Can the builder profit from your occupancy fee?
In principle a builder can, because section 80(4) sets a ceiling rather than a cost-recovery rule. The fee cannot exceed the total of the three amounts, but nothing requires the builder to show that the total matches what carrying your unit actually costs them.
In practice the ceiling closes most of the room to profit: one component is fixed by formula and two are checkable. Four things to confirm:
Check the prescribed rate. Under section 19(1) of O. Reg. 48/01, it is the Bank of Canada's most recently reported chartered bank administered rate for a conventional one-year mortgage, as of the first of the month you take occupancy. In September 2026 that was 5.49%.
Check the balance it applies to. Interest runs on the purchase price minus every deposit you have paid. Add up your receipts and confirm the figure.
Check the tax estimate. Multiply your purchase price by your municipality's residential rate and divide by 12. Toronto's 2026 rate is 0.767311%. Treat that as a rough ceiling: the tax is assessed on your MPAC assessed value, which for 2026 still rests on January 1, 2016 values.
Ask where the reserve fund portion sits. If occupancy runs past six months and the common expense component includes a projected reserve fund contribution, section 80(5) requires the builder to hold that portion of every month after the sixth in trust and remit it to the condo corporation on registration.
Your lawyer can ask for the calculation behind each line. Most disputes turn out to be arithmetic rather than bad faith: a deposit not credited, or a stale assessment.
How much are interim occupancy fees?
Interim occupancy fees are whatever the section 80(4) formula produces for your unit. On a $650,000 Toronto condo with 20% paid in deposits, that works out to roughly $3,245 a month at the September 2026 prescribed rate.
Assume a 600 square foot unit and a builder's common expense budget of $0.75 per square foot, both illustrative. The arithmetic runs:
Unpaid balance. $650,000 less $130,000 in deposits leaves $520,000.
Interest. $520,000 at 5.49% is $28,548 a year, or $2,379 a month.
Estimated municipal taxes. $650,000 at Toronto's 0.767311% is $4,988 a year, or $416 a month.
Projected common expenses. 600 square feet at the assumed $0.75 per square foot is $450 a month.
Total. Roughly $3,245 a month.
Over a 10-month occupancy that is about $32,450, of which $23,790 is interest you do not get back.
Two levers change the result. Larger deposits shrink the balance interest runs on, and section 80(3) lets you elect, before your rescission period expires, to pay the balance in full at occupancy, removing the interest component altogether.
How long does interim occupancy last in Toronto?
In practice, interim occupancy in Toronto usually runs three to nine months, and in a large tower it can pass 18 months. The clock is set by how long the builder takes to register the declaration and description, not by anything you or your lawyer control.
Your floor matters more than buyers expect. Municipalities clear floors from the bottom up, so a fourth-floor buyer may start paying months before a fortieth-floor buyer. Both stop on the same registration day.
This is also the phase where lobbies and amenities are still unfinished. Section 80(6) puts the builder in the condo corporation's shoes: they must provide the services the corporation will provide, and repair and maintain the property. That duty is your lever on neglected common areas, separate from the Tarion warranty on your unit.
Can you sell during interim occupancy?
Not in the ordinary sense, because without title there is no unit to transfer. What you may be able to do is assign your rights under the agreement of purchase and sale, or the right to occupy.
Both normally need the builder's consent. Section 80(6)(d) lets the builder withhold consent to an assignment of the right to occupy, and section 80(6)(e) lets them charge a reasonable fee. Most builder agreements add conditions and fees of their own, commonly running into the thousands.
Renting the unit out is governed by your agreement rather than the Act, and many prohibit it. Two other things to settle before occupancy:
Insurance. You do not own the unit, so a homeowner policy does not fit. You need coverage for your contents, improvements, and liability as an occupant.
Damage. The builder repairs and maintains the property under section 80(6)(b), but not damage you or your guests cause. Document the unit's condition at your pre-delivery inspection.
What happens if the builder misses your occupancy date?
If the builder misses your occupancy date, Tarion's delayed occupancy compensation is capped at $7,500, and it only starts once a Firm Occupancy Date has been missed. That detail surprises people, because a builder can move a Tentative Occupancy Date repeatedly on at least 90 days' written notice and owe you nothing.
Your Tarion Addendum opens with a Statement of Critical Dates you both sign, setting the First Tentative Occupancy Date, the Final Tentative Occupancy Date (set within 30 days of roof completion), the Firm Occupancy Date, and the Outside Occupancy Date.
If the unit is not ready by that outside date, a 30-day Purchaser's Termination Period lets you walk away and recover all deposits, extras, and upgrades with interest.
Where it applies, compensation is $150 a day for living expenses with no receipts, direct costs such as moving and storage with receipts, and $1,500 more if the builder gave less than 10 days' notice.
Missing the deadlines is what usually forfeits a claim. You have 180 days from your occupancy date, or from termination, to claim against your builder. If the builder does not pay, you have until the end of your first year of possession, or 365 days after termination, to claim against Tarion.
One gap is worth naming: the warranty covers a late occupancy date, not a long wait between occupancy and registration, which is what actually drives your total bill.
What should you check in your agreement before you sign?
Check the occupancy fee clause, the tax reconciliation language, the Statement of Critical Dates, and the assignment and leasing terms. Section 73(2) gives you 10 days to rescind, running from the latest of the days you receive the disclosure statement, the condominium guide, and the signed agreement.
These provisions sit in the middle of a long agreement and get skimmed, which is why the first invoice comes as a shock.
The occupancy fee clause. Confirm it tracks the three components in section 80(4) and adds nothing else.
The tax reconciliation language. Make sure it reflects your refund right under section 80(8) rather than waiving it.
The Statement of Critical Dates. Every date must be a calendar date, not one tied to another event.
Assignment and leasing terms. Note the consent conditions, the fee, and any ban on renting during occupancy.
Any outside date for registration. Its absence is common and worth knowing before you sign, not in month 14.
What falls due at final closing. Development charges, utility hook-ups, and the HST rebate are separate from occupancy fees, and land with your other closing costs.
Frequently asked questions
Do you pay a mortgage during interim occupancy?
No. Your lender advances the mortgage at final closing, when title transfers to you. During occupancy you pay the occupancy fee instead, and your first mortgage payment comes after registration.
Can your occupancy fee change during the occupancy period?
The tax and common expense components can be revised, since both are estimates. The interest component is fixed by the prescribed rate in effect on the first of the month you take occupancy, so later rate changes do not move it.
What happens to your deposits during interim occupancy?
They stay in trust under section 81 of the Condominium Act, 1998 and are credited against the purchase price at final closing. They also reduce the balance your interest is calculated on.
Are occupancy fees tax deductible in Ontario?
Not for a unit you live in. If your agreement permits you to rent the unit out and you do, the fee may be deductible as a carrying cost against rental income. Confirm the treatment with an accountant.
Who pays the utilities during interim occupancy?
Separately metered utilities are normally yours from the occupancy date. Anything bundled into the building's operating costs sits inside the projected common expense component.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
At Ownright, we focus entirely on Ontario residential real estate law. We help buyers and sellers with purchase closings, sales, refinancing, and status certificate reviews, including the two-stage closings a new condo brings. A digital platform tracks every milestone, and our in-house lawyers are reachable by chat, email, or video call. You can start your closing online or get in touch with any questions.
Legal references: Condominium Act, 1998, S.O. 1998, c. 19, ss. 73, 80, 81; O. Reg. 48/01 (General), s. 19(1); Residential Tenancies Act, 2006, S.O. 2006, c. 17; Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31.
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
