What Are Interim Occupancy Fees and How It Could Affect Your Budget
When a Buyer has purchased into a condo development, and upon taking possession of the unit, the period between the interim occupancy date to the unit transfer date is called the occupancy period. At the interim closing, the Buyer will be asked to provide a number of post-dated cheques to the Builder to cover the monthly occupancy fee for the period until the condo is registered.
So how will the occupancy fee affect your budgeting? I get asked this question a lot. Technically there is no exact minimum or maximum charged by the developer, but the amount cannot exceed the prescribed interest calculated on a monthly basis on
1] the unpaid balance of the purchase price at a prescribed rate;
2] an estimate based on the municipal tax on the unit on a monthly basis;
3] the projected monthly common expense contribution for the unit
If the purchase price is $351,700 and the purchaser only placed a 5% deposit, their remaining 95% would be $334,115.00.
The occupancy fee would estimate to be $890.97 ( multiply the remaining 95% amount by an interest rate of 3.2% [prescribed by the builder], divided by 12)
The maintenance fees for the suite is $377.50
The property tax (of the land value only) would be $125.00
The total approximate occupancy fee would be $1393.47.
So next time you buy into new construction condominiums, it will be prudent to figure out the estimate on interim occupancy fee on your unit, and have a lawyer review the Agreement during the cooling period in order to understand the implications of the interim occupancy fee.
If you are looking to purchase pre-construction or new construction investment in Toronto, get in touch to set up a pre-purchase meeting to understand all the steps.