The Closing Process for New Condominiums
Revised March 5, 2003

Purchasers of new condominiums face a unique two step closing process. This is because the new condominium is generally going to be ready for occupancy before legal title can be conveyed to the new owner. It is only if your closing date is after the date on which the condominium is legally registered that you take possession and become the registered owner all on the same date. The two step closing process consists of an interim closing and a final closing.

Interim Closing

The Agreement of Purchase and Sale normally requires the purchaser to take possession of the unit on the date when the unit is substantially complete and ready for occupancy. This is called the "Interim Closing Date". On this date, the Purchaser pays the balance owing under the contract and is given possession of the unit. However, the purchaser does not receive legal title to the unit at this time. This will only occur on the "Final Closing Date". All monies paid towards the purchase price on the Interim Closing Date must be held in trust in accordance with the provisions of the Condominium Act or security must be provided to ensure that the funds will be protected until legal title is given to the purchaser.

During the Interim Occupancy Period, which runs from the Interim Closing Date to the Final Closing Date, the purchaser must fulfill certain obligations set out in the Agreement of Purchase and Sale. As a minimum, he or she is going to have to abide by all rules and regulations of the condominium and pay a monthly occupancy fee. Usually post-dated cheques for the occupancy fee will be delivered to the Vendor on the Interim Closing Date.

The Interim Occupancy Fee varies from one development to the next as it is based on a formula set out in the Condominium Act. The fee cannot exceed the sum of: (a) the common expenses that a registered owner would be required to pay; (b) an amount reasonably estimated on a monthly basis for municipal taxes attributable to the unit; and (c) the interest payable on the balance of the purchase price not paid in cash on the Interim Closing Date. The more cash you pay on the Interim Closing Date, the lower your Interim Occupancy Fee will be.

If you are putting on a mortgage, the funds being loaned to you under it cannot be advanced to you until the Final Closing Date. However, you will pay interest on the amount of your mortgage during the Interim Occupancy Period. You will not pay this interest to your mortgage company but to the Vendor. The Condominium Act allows the Vendor to require you to sign a temporary mortgage in its favour to enable the Vendor to collect this interest from you. The amount of the mortgage will equal the balance of the purchase price not paid by you on Interim Occupancy. The mortgage will be cancelled on the Final Closing Date.

If the purchaser fails to pay the occupancy fees during the Interim Occupancy Period or breaches any other obligations under the Agreement of Purchase and Sale, the developer, at its option, can terminate the contract, keep the deposits, and require the purchaser to vacate the unit.

Final Closing

Once the Condominium Corporation is registered, the developer can transfer title to the individual units to the purchasers. On the Final Closing Date, the purchaser will be required to pay the balance of the purchase price, either from his or her own funds or from a mortgage advance. The developer will provide a deed for the purchaser's unit. The Vendor will also prepare and deliver a final accounting for all sums paid or owing under the terms of the Agreement of Purchase and Sale. Once documents and cheques have been exchanged between the Vendor's and Purchaser's lawyers, the deed may be registered, making the Purchaser the legal owner of his or her condominium unit.

Experienced real estate lawyers will be knowledgeable about this two step closing process. They will guide you through the Interim Closing and the Final Closing. They will also advise you of your rights and obligations during the Interim Occupancy Period.