When a new condo building is ready to live in but not yet legally registered, you move in without owning your unit. Until the building is registered, you pay the builder a monthly interim occupancy fee. On a $700,000 condo with 20 per cent already paid in deposits, that fee is about $3,260 a month at the current prescribed rate.
It catches first-time buyers off guard for one reason: none of it comes off what you owe. This page explains what the fee is made of, how to estimate yours, how long it lasts and what you can do about it.
What the fee is made of
Ontario’s Condominium Act limits the fee to the total of three things:
- Interest on the unpaid balance of the purchase price, calculated monthly at a prescribed rate.
- Estimated property tax for your unit.
- Projected common expenses for your unit, which is what your maintenance fee will be.
The builder cannot add a profit margin or other charges to it. The interest is by far the largest part.
The prescribed rate
The interest part uses the Bank of Canada’s one-year conventional mortgage rate for the month your occupancy begins. That is a posted rate, not the discounted rate you would get on a real mortgage. On September 30, 2026 it was 5.49 per cent, well above the 3.40 to 4.34 per cent that lenders are actually offering.
That gap is why the occupancy fee is often higher than your mortgage payment will be once you close.
Estimate your fee
None of this reduces what you owe on the home.
Property tax and common expenses are the builder’s estimates and appear in your occupancy statement. The disclosure documents you received at signing show the projected common expenses for your unit.
Worked examples
| Purchase price | Unpaid balance, 20% paid | Interest at 5.49% | Tax and common expenses | Monthly fee | Six months |
|---|---|---|---|---|---|
| $550,000 | $440,000 | $2,013 | $580 | $2,593 | $15,558 |
| $700,000 | $560,000 | $2,562 | $700 | $3,262 | $19,572 |
| $900,000 | $720,000 | $3,294 | $920 | $4,214 | $25,284 |
The tax and common expense figures are our estimates for illustration. If you have paid only 15 per cent by occupancy, the $700,000 example rises to about $3,420 a month.
Occupancy fee against a mortgage payment
Take the $700,000 condo with $560,000 still owing.
| During occupancy | After final closing, 3.40% variable | |
|---|---|---|
| Interest or mortgage payment | $2,562 | $2,774 |
| Tax and common expenses | $700 | $700 |
| Total a month | $3,262 | $3,474 |
| Amount that pays down your home | $0 | About $1,190 in the first month |
The monthly cost is similar. The difference is that the mortgage payment builds equity and the occupancy fee does not. Six months of occupancy on this unit costs about $15,400 in interest that you would otherwise not have paid at all, since no mortgage interest is charged until you close.
How long it lasts
Occupancy ends when the condominium is registered and the builder sets a final closing date. That depends on the building being substantially finished, municipal sign-offs and the land registry.
- Typical range: a few months to about a year. Large towers take longer.
- Lower floors wait longest. Occupancy is staged from the bottom up, so a buyer on the fifth floor can be paying for many months before the penthouse is finished.
- Ask about the builder’s last building. How long occupancy lasted there is the best guide you will get.
What you can do about it
Check the statement
Your lawyer receives an occupancy statement. Check that the interest is calculated on the unpaid balance after all your deposits, at the right prescribed rate, and that the tax and common expense estimates match the disclosure documents.
Get the tax reconciled
The property tax part is an estimate. After final closing, the builder must adjust for the actual tax, and you are refunded if you overpaid. Ask your lawyer to follow up, because it is not automatic in practice.
Paying more at occupancy
Some agreements let you pay an extra amount at occupancy to reduce the unpaid balance and so the interest. It works on paper. The risk is that you hand over more money before you have title. Deposits on a new condo are protected by Tarion only up to $20,000, with further amounts held in trust or insured under the Condominium Act. Ask your lawyer how your extra payment would be protected before doing this.
Renting the unit out
You can only lease during occupancy if the builder agrees in writing. Many refuse, and some charge a fee. If you are an investor, settle this before you sign, because without it you carry the full fee with no rent coming in.
Keep your financing alive
Your lender will re-check your income, debts and credit before final closing, which may be a year after you moved in. Avoid new loans, a new car or a job change in that period if you can. Also get your rate hold timed to final closing, not to occupancy.
What you can and cannot do while you wait
- You can live in the unit, and you insure your own contents and liability.
- You do not own it. You cannot sell it, and assigning your agreement needs the builder’s consent.
- Major changes to the unit usually have to wait until you have title.
- The building will still be under construction. Amenities, elevators and hallways are often unfinished for the first months.
- Land transfer tax and the rest of your closing costs are not due yet. They come at final closing.
Freehold homes do not have this
Interim occupancy applies to condominiums, including condo townhouses. A freehold house or townhouse closes once: you get the keys and title on the same day, and your mortgage starts then. It is one of the practical differences between buying a new condo and a new house.
Where this fits in your budget
Occupancy fees are one line in a longer list. Our guide to pre-construction closing costs in Ontario covers levies, Tarion fees, land transfer tax and HST, with an estimator for the total. For the monthly cost after you close, see current mortgage rates. Projects with their expected occupancy dates are in our pre-construction list.
Questions buyers ask
Do occupancy fees go toward my mortgage or purchase price?
No. They are a charge for living in the unit before you own it. Nothing is credited to the price.
What interest rate is used for occupancy fees in Ontario?
The Bank of Canada’s one-year conventional mortgage rate in the month your occupancy starts. It was 5.49 per cent at the end of September 2026.
Can I refuse to take occupancy?
Not without breaching the agreement. Once the builder gives proper notice that the unit is ready, you are required to take occupancy and start paying.
Are occupancy fees tax deductible?
Not for a home you live in. For a rental property, some of the cost may be deductible, so ask an accountant.
Do I pay occupancy fees on a parking space and locker?
They are part of the purchase price, so they are in the unpaid balance, and they carry their own share of common expenses.
Sources
- Condominium Authority of Ontario: pre-construction condos, interim occupancy and deposit protection.
- Bank of Canada: posted interest rates offered by chartered banks, one-year conventional mortgage, September 30, 2026.
- Isenberg and Shuman, real estate lawyers: how occupancy fees are calculated.
- Examples calculated by Local Toronto. Tax and common expense amounts are estimates.
This page is general information, not legal advice. Your lawyer will review your occupancy statement. HomeLife Landmark Realty Inc., Brokerage.