This guide is general information for educational purposes only. It is not legal, tax or financial advice. Speak with a qualified lawyer, accountant or tax professional about your situation.
For June 2026 occupancy, Ontario's fee cap combines 5.49% interest on your unpaid balance, estimated taxes and common expenses. See a worked example.
This is for buyers and investors who are buying a pre-construction condo in Toronto and have just received an occupancy notice. The question I hear most often: what exactly is this monthly payment to the builder, and how is it calculated?
Short answer: interim occupancy is the period when you can live in your suite but do not yet own it. The builder may charge a monthly fee capped by the Condominium Act at three items: interest on your unpaid balance, estimated property taxes and projected common expenses.
For occupancy beginning or required in June 2026, the prescribed interest rate is 5.49%. None of the fee reduces your purchase price.
What is interim occupancy in an Ontario condo?
A new condo building can become fit to live in before it is legally registered as a condominium. Registration is the step that creates the condominium corporation and the individual units as separate legal properties. Until it happens, the builder cannot transfer title to you.
The Condominium Act, 1998 (section 80) defines interim occupancy as occupancy of a proposed unit before the purchaser receives a deed in registerable form. In plain terms, you have the keys but not the title. The builder (the Act calls it the "declarant") has statutory duties during this period.
You are paying to occupy a suite you have not yet closed on. These fees are not credited to the final purchase price.
How are interim occupancy fees calculated?
Section 80(4) of the Act sets a ceiling. The monthly occupancy fee cannot be greater than the total of three amounts:
- Interest on the unpaid balance. Interest, calculated monthly, on the part of the purchase price you have not yet paid (price minus deposits), at a rate set by regulation.
- Estimated municipal taxes. A reasonable monthly estimate of the property tax attributable to your unit.
- Projected common expenses. The projected monthly common expense contribution for your unit. The actual maintenance fee after closing may differ from this projection.
Because the law sets a maximum, a builder may charge less. For budgeting, I underwrite it at the cap.
What interest rate applies?
The rate is fixed by Ontario Regulation 48/01, section 19. It is the rate the Bank of Canada most recently reported as the chartered bank administered rate for a conventional one-year mortgage, as of the first of the month in which you assume occupancy or are required to do so under your purchase agreement.
The Bank of Canada publishes that figure weekly in its posted interest rates series. It has stood at 5.49% since March 11, 2026, so a buyer whose occupancy begins in June 2026 would see 5.49% applied to the unpaid balance. This is a posted rate, rather than your individual mortgage rate.
Worked example: a $2,000,000 Toronto suite
Take a hypothetical $2,000,000 suite where the buyer has paid 20% in deposits ($400,000), leaving an unpaid balance of $1,600,000.
I use Toronto's 2026 residential total tax rate of 0.767311% and assume, solely for this example, an assessed value equal to the price. Actual taxes depend on assessed value, not purchase price. The common expense figure is a placeholder; yours comes from the disclosure statement budget.
| Component | Basis | Monthly |
|---|---|---|
| Interest on unpaid balance | $1,600,000 × 5.49% ÷ 12 | $7,320.00 |
| Estimated property tax | $2,000,000 × 0.767311% ÷ 12 | $1,278.85 |
| Projected common expenses | Hypothetical budget figure | $1,450.00 |
| Total occupancy fee | $10,048.85 |
Over time, the totals add up quickly. These totals use the rounded monthly fee and assume unchanged taxes and common expenses:
| Interim period | Total fees paid | Of which interest |
|---|---|---|
| 3 months | $30,146.55 | $21,960.00 |
| 6 months | $60,293.10 | $43,920.00 |
| 12 months | $120,586.20 | $87,840.00 |
The interest line is an additional carrying cost before closing. Taxes and common expenses are costs you would carry as an owner anyway. Had the same buyer put down 30%, the interest line would fall to $6,405 a month. For a given price and rate, a larger deposit reduces the unpaid balance and the interest charge.
Can you reduce the interest portion?
Section 80(3) lets purchasers elect to pay the full balance on assuming occupancy, removing the interest component. You must elect before the section 73(2) rescission period expires: 10 days after the latest receipt of the disclosure statement, applicable condominium guide and agreement signed by both parties.
If you have the liquidity and a deposit-heavy structure suits you, raise this with your real estate lawyer before you sign. Paying in full means funding a large balance before you hold title, so the trade-off deserves careful review.
Leaving the suite empty does not change the fee. Section 80(4) permits the fee when you assume occupancy or are required to do so under the agreement, whether or not you move in.
How long does interim occupancy last?
Section 80 sets no fixed maximum. Registration must occur before you receive a deed to the unit in registerable form. Interim occupancy ends when you receive that deed, rather than automatically on registration.
Once the declaration and description are registered, the builder must notify you in writing of the registration date and instrument numbers within 30 days, unless you have already received your deed. Final closing follows. At final closing, the occupancy fee stops and you take on property taxes, common expenses and any mortgage payments.
In my underwriting I plan for at least six months and stress-test twelve.
What does the builder owe you during occupancy?
The fee comes with obligations. Under section 80(6), the builder must provide the services the condominium corporation will later provide, and must repair and maintain the unit and property to the same standard. It also has the same right of entry the corporation will have.
Three other rules matter in practice:
- Tax true-up. If the tax portion you paid exceeds the amount actually assessed, the builder must refund the excess. If it falls short, the builder may bill you the difference (sections 80(8) and 80(9)).
- Reserve fund money. A reserve fund pays for major repairs and replacements of common elements and corporate assets. If occupancy runs past six months and the fee includes a reserve contribution, the builder must hold that portion in trust for each later month and remit it to the corporation on registration (section 80(5)).
- Rent rules. Section 80(10) states that Part VII of the Residential Tenancies Act, 2006 (its rules relating to rent) and several other sections do not apply to interim occupancy fees. Rent guideline limits do not cap them.
What does Tarion cover during interim occupancy?
According to Tarion, the warranty on work and materials for your unit begins on your occupancy date, rather than at final closing. Register with Tarion's MyHome portal promptly, and note the deadlines for submitting warranty claims.
Tarion also governs occupancy dates. Its delayed occupancy warranty can provide compensation up to $7,500 for delay beyond the Firm Occupancy Date, including $150 a day for living expenses. Exceptions include permitted unavoidable delays and date changes by mutual agreement.
If occupancy has not been provided by the Outside Occupancy Date, you have 30 days to terminate by written notice to the builder, unless the failure results from your breach of contract. Review the Addendum for the applicable dates and conditions.
The caveat: those protections concern when occupancy starts. Tarion's delay compensation is tied to occupancy dates, not to how long you wait between occupancy and registration.
What this means for you
Luxury end-users. Treat occupancy as a cost of the purchase, not a grace period. Budget the full fee for twelve months, keep your current home's carrying costs in view, and allow for construction that may still be underway in the building.
Investors. The builder may withhold consent to an assignment of your right to occupy and may charge a reasonable fee for consenting (section 80(6)). Check your agreement before planning to lease during occupancy.
Compare permitted rental income with the full occupancy fee. For context, see my posts on rental-market conditions and pre-construction assignments.
Rental owners and family offices. Model the potential cash-flow shortfall during occupancy. The interest line is tied to a posted one-year rate, so rate direction matters when your occupancy month is set.
Frequently asked questions
Are interim occupancy fees credited toward my purchase price?
No. The fees are not credited to the final purchase price. Think of them as the cost of occupying the suite before closing.
Which month's interest rate is used?
Under O. Reg. 48/01, it is the Bank of Canada one-year conventional mortgage rate most recently reported as of the first of the month in which you assume occupancy or are required to do so under the purchase agreement.
Can my builder charge more than the three components?
No. The fee cannot exceed the three-part cap in section 80(4). The tax portion is trued up against the actual assessment, so you may receive a refund or a further bill.
Do I still pay the fee if I do not move in?
Yes, if you are required to assume occupancy under your agreement. Section 80(4) permits the fee whether or not you actually move in.
When do the payments stop?
When the condominium is registered and title transfers to you at final closing. From then on you pay common expenses, property taxes and any mortgage payments.
Sources
- Condominium Act, 1998, S.O. 1998, c. 19, sections 73 and 80 (Government of Ontario, e-Laws)
- Ontario Regulation 48/01 (General), section 19 (Government of Ontario, e-Laws)
- Posted interest rates offered by chartered banks (Bank of Canada)
- Conventional mortgage, 1-year, series V80691333 (Bank of Canada Valet data)
- Property tax rates and fees, 2026 (City of Toronto)
- Warranty Information for New Condominium Units, July 1, 2023 (Tarion)
- Condominium Delayed Occupancy Warranty, revised July 1, 2012 (Tarion)
- Condo units: coverage for occupancy dates, delays and cancellations (Tarion)
- Residential Tenancies Act, 2006, S.O. 2006, c. 17 (Government of Ontario, e-Laws)