Can I just followup to question 3? I was told interim closing we would need to pay 10%, but I gather this is not the same as interim occupancy? If we are able to move in before registration, what exactly is this "phantom rent"? Does this mean you don't have to start to pay your mortgage or your condo fees? I am worried that if we are the first ones to move in there will be little to no amenities for quite a while. Isn't it a big ripoff to be paying the condo fees right from the beginning? Would we be able to argue that if we don't have the full amenities at time of move in then we should have to pay the full condo fees? Thanks.
I would ask your lawyer, but here is the jist of the situation...
The Condominium Act requires condominium developments to be constructed to a substantial level prior to registration of the condominium, and title to a unit cannot be transferred until the condominium is registered. As such, it is typical for condominium units to be ready for occupancy well before any sales can close.
The Act permits developers and unit purchasers to agree that the purchaser assumes occupancy of the unit when it is ready for occupancy even though this is prior to registration and closing. If you read the documentation that you signed when you purchased, this should be clearly outlined (check you APS). This period of occupancy of the unit is called “interim occupancyâ€.
As such, when a purchaser goes into "interim occupancy", the developer is entitled to charge a fee, which sometimes falsely called “rent†or the "phantom rent" or a "phantom mortgage". In fact, as per the Act it is called the “occupancy feeâ€.
This amount is normally based on the following three points:
1. Interest calculated on a monthly basis on the unpaid balance of the purchase price at the agreed rate;
2. estimated monthly municipal taxes attributable to the unit; and
3. the projected monthly common expense contribution for the unit.
The monthly interim occupancy payments are not refundable, nor are they credited to you on closing. They neither count towards your mortgage, nor any maintenance fees following closing on your unit.
This is a very normal process in Toronto.
Remember, the developer wants the building to be registered as quick as possible, as they do not receive your payment for the unit until your unit is transfered. Nevertheless, this process can take quite a few months from the first occupancy (8-12 months is quite normal on a larger building).
