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    Interim Occupancy Fees Related to a New Build Condominium Purchase

    When a purchaser buys a newly constructed condominium unit, the builder will often allow them to move in prior to being able to transfer legal title to the property.  This occurs in almost all new build condominiums since the legal process required to declare a condominium building requires a survey of the finished product. This is also known as “interim occupancy”, when an occupancy permit is available.

    As a result, the purchaser will have access to and can live in the property under an occupancy license but does not have to pay the purchase price.  The cost for a purchaser to have such access is a monthly occupancy fee.  Occupancy fees are akin to rent (although the occupancy license will ensure that the relationship of landlord and tenant is not created), where the purchaser gets the benefits of the property and must pay a fee in return.

    Many purchasers do not understand why occupancy fees exist.  If title to the property has not yet been transferred to the purchaser, they are not able to obtain mortgage funds from a lender.  A lender will only advance when title is available. Therefore, the purchaser is enjoying all the benefits of the property, without having to pay interest on a mortgage. The occupancy fee is a cost that puts the purchaser in the position it would be, had the mortgage funds been advanced. The occupancy fee is a combination of the projected common element fees, the projected utility cost for separately metered utilities, and interest on the unpaid balance of the purchase price.  The unpaid balance of the purchase price is the purchase price of the property less the mortgage amount shown in the commitment.

    The length of time that a purchaser will be required to pay occupancy fees depends on how long interim occupancy lasts.  The entire building must be completed before registration of the condominium declaration is completed.  Once the building is declared to be a condominium, title to the many units can be transferred to the various purchasers.  Interim occupancy continues until title is transferred.

    Once title is transferred the purchaser becomes the owner and no longer needs to pay occupancy fees. The fees that the purchaser must pay are limited now to condo common element fees, separately assessed utilities and any costs associated with a mortgage, if the purchaser financed the properly.

    If you are thinking about purchasing a new condominium unit and would like assistance with the purchase, our Real Estate Group can explain the entire process to you, review the agreement of purchase and sale on your behalf, and complete the transaction.  Please let us know if we can be of service by clicking here or by calling Noah Potechin at 613-563-6692.

    The content on this website is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship. If you would like to discuss your specific legal needs with us, please contact our office at 613-563-7544 and one of our lawyers will be happy to assist you.

    Posted By: Noah Potechin of Merovitz Potechin LLP

    Associate

    Noah Potechin joined Merovitz Potechin LLP in 2013 as an articling student and was called to the Ontario Bar in June 2014. As an articling student, Noah was exposed to a wide range of legal issues, such as residential and commercial real estate, leasing, business law, estate litigation and construction lien work. He has now begun practicing law full time at Merovitz Potechin LLP, focusing primarily on residential real estate and mortgage enforcement.  Noah also practices in the area of private mortgage financing, title corrections, commercial real estate transactions, residential leasing, development law and the preparation and registration of Notices of Lease.

    When not spending time with his young family or exploring world cuisine with his wife, Noah can be found at the top of mountains eager to snowboard or in his dojo, teaching the martial art Aikido.

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