Interim And Final Closing – All You Need To Know
An interim occupancy and final closing are applied in the housing sector. The time frame when your house is under construction, but you can occupy it is called the interim occupancy. When the house is finally done, they make you sign an agreement, which is the final closing. This agreement is applied in all the places in Toronto. But how is it important to you? Keep reading to find out more about interim and final closing.
What is interim occupancy?
Interim occupancy is when the government deems an area fit for living, and the residents move in during the pre-construction phase. Later, the municipality needs to check the building and carry out a detailed inspection. The house is still under construction, but the tenants are allowed to stay in. For this, they need to sign an agreement and pay some fees.
The interim occupancy lasts anytime between three to eighteen months. In fact, the most complicated question that the residents have is if they can rent their house to someone else while it is in the interim occupancy phase. The answer is a little technical. When the house is in interim occupancy, the house is owned by the builder and not the buyer yet. So the permission of the builder is required to be able to rent the house to someone else. This is a long and complicated process, and it is advised to rent it after the house is under your name.
What does the interim occupancy fees include?
The interim occupancy fees include the necessary maintenance fees for the condo you are living in. These fees are similar to what later you will pay as maintenance for the house. It isn’t extravagant, or something that can help the builder makes a profit of his own. It also includes the interest of the money used from the bank to build the building. Moreover, you are not required to pay the housing loans as the building hasn’t been prepared and fit for complete use yet.
A lawyer isn’t necessary for this contract and payment of fees. The common misconception is that these fees ensure extra profit for the builder. Still, because of the legal acts under interim occupancy, they make sure that these are just the necessary fees that cover an approximation of taxes, condo fees, and monthly interest payments on the rest of the total purchase amount. The costs need to be paid even if the tenant isn’t occupying the house during the interim occupancy period. The stay is irrelevant. Legally, it’s compulsory to pay this fee to the builder for further process.
What is the final closing?
The final closing is when, after some months, you get your own house under your name. The builder decides on an outside occupancy date. This is the date that your builder promises to let you occupy your condo under your name. In other words, it is the last date of the interim occupancy.
According to Addendum, this date must fall on a weekday. The date has to be agreed upon by both the builder and the occupant. The purchase agreement is signed on this date. Your lawyer calls you to sign the agreement called ‘statement of adjustments.’ This document just states that the financial processes to stay for the house can be started henceforth.
After the final closing, the mortgages are to be paid. The adjustment in the agreement includes property taxes and condo fees. A trust ledger is established wherein your lawyer shows the amount for the house as a trust that it will be paid in the near future. The amount will cover everything from the closing amount, one amount which covers everything such as title insurance, all fees, and land transfer tax to the remainder of your down payment if it’s necessary.
A few days before the final closing, the lawyer will process the transfer and get the banking and funding for your house. The lawyer will send the agreement signed along with funds to the lawyer of the builder. After this process, finally, the house will be yours!
The New Law
According to the latest law, the interim occupancy certificate will no longer be needed. This is to imply for all the housing sectors to be built after 1st September 2019. Instead of this, a compete occupancy certificate needs to be submitted.
The complete occupancy certificate will only be issued after the municipality checks that the building is no longer under construction and is deemed fit for the occupants to stay. Any buildings to be built after 1st September cannot be occupied by occupants before the government doesn’t issue a full complete occupation certificate. In simple words, the occupant can only stay in the condo after the building is done, and there are no constructions left.