With some of the most exciting and immaculate developments in North America, it’s no surprise that Toronto’s pre-construction condo market continues to heat up year over year.
Buying a pre-construction condo is a unique, highly advantageous path to home ownership. However, it’s also a specialized process, one that comes with additional logistics and details to navigate. For some buyers, the many complexities that come with pre-construction transactions can cause some confusion.
This post will look at one of the most common misconceptions amongst pre-construction condo buyers in Toronto – interim occupancy.
Like any construction project, delays with pre-construction condos can occur. Explore our blog post about buyer’s rights in the case of occupancy delays here.
Pre-Construction Occupancy at a Glance
After you buy a pre-construction condo unit, you’ll need to wait before you can move in. In Toronto, this waiting period is often up to 2-4 years depending on the project.
As the building gets closer to completion, you may be granted permission to move into your unit before construction is completely finished. However, even if you’re living in the building, it doesn’t mean you have complete ownership of your unit just yet.
The period between moving in and the official closing of the project (when ownership is transferred to you) is known as the interim occupancy period (IOP).
Life in your condo will be a little different during the IOP compared to when you have full ownership of your unit. From variations in rights to additional costs, it’s important to be aware of how your IOP differs from ownership, and how you can best prepare for this stage in your buying journey.
Interim Occupancy Duration
Interim occupancy begins when a buyer’s unit is deemed liveable. In most cases, units on lower floors are ready for move-in first, and those at the top last. As a result, the duration of interim occupancy varies buyer by buyer. Your IOP could be as long as 18 months (in rare cases of significant delays) or as short as a few weeks depending on your unit and developer.
In need of more helpful resources related to the unique complexities of pre-construction? Explore a few of these posts from our blog.
- What to do if Your Pre-Construction Condo is Delayed
- Case Study: Moving From 3500 Square Feet to 1000
- Can You Sell a Condo During the Pre-Construction Phase?
Rights & Permissions
While you may be able to move into your unit before construction is finalized, you won’t have complete rights to the space until the building is finished. If you move in during interim occupancy, it’s important to have a complete understanding of your rights to avoid confusion or potential violations.
During the IOP, you’re essentially leasing your unit from the developer. This means that even though you’ve moved in, they still own it. Therefore, if you intend to modify, upgrade, or even lease out your unit, you’ll need written permission from the developer first. Depending on what you’re looking to do, they may be able to deny your request until you’ve received a transfer of ownership.
With some of the highest home prices in North America, buying property in Toronto is out of the realm of possibility for many millennials. However, the city features many great options for renters. Check out these posts to learn more.
- Purpose-Built Rentals in Toronto
- Selling to Rent: What Downsizers Need to Know
- Renting in Toronto: 3 Neighbourhoods Perfect For Millenials
IOP Fees
During the interim occupancy period, you will be required to pay the developer a monthly occupancy fee separate from your existing mortgage. Be aware, you’ll be on the hook for this cost even if you don’t move in during this time period! This is an important detail that can lead to unpleasant surprises if overlooked.
While typically not as high as a monthly mortgage payment, interim occupancy fees can be quite substantial. Therefore, you’ll need to ensure you budget adequately in advance. This is especially true if there will be an overlap between your rental lease and when you intend on moving into your unit.
This is another reason why working with a real estate agent during the purchase of your pre-construction condo is essential. They’ll ensure you’re well aware of interim occupancy fees and any other hidden costs upfront.
Have questions about buying a pre-construction condo? Our team of local experts is here to help. Send us an email.
