Occupancy period or Interim occupancy is the time between when you take occupancy and when you take ownership of your unit. The process to register a new condo in the Land Registry System takes time and technically you cannot own something that does not exist or rather has not been entered into this system in Ontario. So you take possession, but not ownership. This is where “Phantom Rent” comes in, you pay the developer for the right to live in the unit.
Occupancy fees (phantom rent) are the equivalent to the interest on the outstanding amount of the purchase price. This is standard practice with buying a new condo and should not deter you from your purchase. Some thing to be aware of with phantom rent:
- The higher your unit is the shorter your occupancy period is. A normal occupancy period is 3- 6 months. Ground floor level may be a longer wait.
- Going with a more experienced builder may save you time. Due to experience the builder is more familiar with the occupancy period process and will have lawyers working around the clock to register the building as quickly as possible.
- The builder wants the building registered as quickly as you do. The bank does not make payment to the builder until the building is registered with the Land Registry System and all unit owners mortgages begin. So the builder will try to make the occupancy period a short one.