What Are Occupancy Fees? - what-are-occupancy-fees-hero

What Are Occupancy Fees?


Expert Analysis

Interim Occupancy Fees refer to the monthly payments an owner pays during the Interim Occupancy Period.  This is period between the time an owner takes possession of the unit and the time the building is fully registered. This only applies to condominiums still in the pre-construction phase, as any and all units sold through a resale transaction will have already gone through the Interim Occupancy Period.

Interim Occupancy Fees are made up of three components.

1. Interest calculated on a monthly basis on the unpaid balance of the purchase price.

2. The monthly maintenance fee contributed for the unit; and

3. A factor of the Property Tax (which will be adjusted if necessary once actual taxes are determined).

Depending on the height of the building and where a unit fits in it, Interim Occupancy can last anywhere from a couple weeks to more than six months.  Someone owning a unit on the 6th floor of a 50 storey building will be in the Interim Occupancy Period for longer than someone on the 46th floor.

Typically the level premium when buying pre-construction is $1,000 per floor.  In almost all cases the Occupancy Fee will exceed $1,000 per month.  A good rule of thumb is that it takes about a week for each floor in a building to be finished construction and ready for move-in.  In some instances it can make sense to purchase higher floors in a building in part to limit your exposure to Occupancy Fees.

Pro Tip: Ask for a clause in your Agreement of Purchase and Sale that assigns you the right to rent your unit during Interim Occupancy Period, as opposed to renting it on Final Closing. 

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