The Ownership Void
- Interim: You have the keys but the bank hasn't funded the builder.
- Phantom Rent: You pay a monthly fee that does NOT pay down principal.
- Closing: The building registers, and your mortgage officially begins.
In Ontario pre-construction, there is a weird "limbo" phase between finishing construction and actually owning the home. It is called Interim Occupancy. You move in, you decorate, you live your life—but legally, the builder still owns your home and you are effectively their tenant.
1. Why Does This Exist?
Condo towers are finished bottom-to-top. The city won't register the building as a legal corporation until the entire structure is done. However, the builder wants you to move into your 4th-floor unit today so they can stop paying for security and insurance on that floor. You get your keys, but because the building isn't a "legal entity" yet, your mortgage cannot fund. You cannot borrow money against an asset that technically doesn't exist in the city's registry.
2. The "Phantom Rent" Math
During this phase, you pay the builder an Occupancy Fee. This is not a mortgage payment; it is "dead money" that does not build equity. The fee consists of:
- Loan Interest: The interest on the builder's unpaid portion of your purchase price.
- Est. Property Tax: Your portion of the building's future tax bill.
- Est. Maintenance: Your future monthly condo fees.
For a $700,000 condo with a $140,000 deposit, you are paying interest on the remaining $560,000. At 2026 rates, your "Phantom Rent" could be $2,800/month. If your interim phase lasts 8 months, you have paid $22,400 without paying down a single dollar of your mortgage.
3. The "Leasing" Trap
Most New Home Buyers plan to rent out their unit if their life plans change. Standard builder contracts prohibit renting during interim occupancy. If you try to find a tenant without an amendment, the builder can sue you or cancel your deal. Your lawyer must negotiate the "Right to Lease" during the 10-day cooling-off period to avoid this $20,000+ risk.