Leasing During Interim Occupancy
Interim occupancy is one of the most confusing parts of buying a pre-construction condo. Your unit is occupiable, but the building isn't yet registered. You owe occupancy fees but don't yet own the unit. Whether you can rent it depends on the rules of your specific developer — not the law alone.
What interim occupancy is
Pre-construction condos have two key dates: occupancy (when the building is finished enough that owners can move in) and registration (when the condo corporation is formally created and titles are transferred).
Between these dates — the interim occupancy period — you can occupy your unit but you don't yet hold legal title. You pay 'occupancy fees' to the developer instead of mortgage payments. The period typically runs 4–18 months.
Can you rent during interim occupancy?
The legal answer: yes, generally, unless your purchase agreement prohibits it. The practical answer: it depends on what your purchase agreement says, and many Toronto-area developers prohibit or restrict it.
Read your Agreement of Purchase and Sale carefully, specifically for clauses on occupancy assignment, leasing during interim occupancy, and prior consent requirements. Some agreements require written developer consent; some prohibit leasing entirely until registration.
Occupancy fees vs. rent
Occupancy fees are calculated as: estimated property tax + estimated condo fees + interest on the unpaid balance of the purchase price. They typically approximate market rent or fall slightly below.
If you lease during interim occupancy, your tenant pays you market rent; you continue paying occupancy fees. The spread (or shortfall) is your interim cash flow.
Tax treatment of interim occupancy
The tax treatment of occupancy fees, mortgage interest during the period, and rental income is nuanced. Some elements are deductible; some are capitalized. Talk to your accountant before lease-up — the right treatment is fact-specific.
Practical leasing considerations
Beyond legal permission, several practical issues:
- Building amenities may not yet be open during interim occupancy, affecting marketing position
- Unit finishes may need warranty corrections during the lease, requiring entry coordination with tenant
- Move-in elevators and shared loading bays are often restricted in early occupancy phases
- Parking and locker assignments may not yet be confirmed
- Mailing address issues affect tenant utility setups and ID documents
Registration: the transition
When the condo corporation registers, your title transfers from the developer, your mortgage funds (if any), and you stop paying occupancy fees. Any tenant in place during interim occupancy continues under their lease, with you as the new landlord of record.
Closing-day administrative work: notify the tenant of the change of landlord, confirm rent direction, transfer deposits to your account, and update lease records. Most CentreKey owners have us coordinate this seamlessly.
When CentreKey gets involved
We work with pre-construction owners from the moment of closing through the first full lease cycle — sometimes earlier, when developer rules permit. The earliest decisions disproportionately shape first-year outcomes; the cost of early advice is minimal compared to the value of getting it right.
Key Takeaways
- Interim occupancy = occupancy without legal title; you pay occupancy fees instead of mortgage
- Whether you can rent depends on your Agreement of Purchase and Sale
- Occupancy fees typically approximate market rent
- Tax treatment of occupancy fees and interest is nuanced — consult an accountant
- Plan for amenity, finish, and parking issues that affect marketing
Need help applying any of this?
CentreKey owners get direct access to in-house paralegal expertise and a dedicated specialist who handles the procedural compliance so you don't have to.
This article is general information for GTA condo owners and is not legal, tax, or investment advice. For matters involving an active dispute or transaction, a qualified professional should review your specific circumstances.
Related guides for condo owners.
Frequently asked questions
What is interim occupancy?
The period between taking possession of a new condo and the building's registration, when title transfers and your mortgage starts. During interim occupancy you don't own the unit yet — you occupy it under the builder's agreement and pay a monthly occupancy fee.
Can I rent out my condo during interim occupancy?
Usually only with the builder's written consent, which your purchase agreement governs. Many builders prohibit it or charge a consent fee. Leasing without consent can put you in breach of your agreement — review your APS before listing.
What is the monthly occupancy fee (“phantom rent”)?
It's typically made up of three parts: interest on the unpaid balance of your purchase price, an estimate of property taxes, and a projected common expense contribution. It is not rent against your purchase price — it's a carrying cost, which is why investors model this period carefully.
Does the RTA protect a tenant during interim occupancy?
Yes. Once you lease the unit, the tenancy is covered by the Residential Tenancies Act like any other — including rent rules and eviction protections. Plan your closing, end dates, and any personal-use intentions around that reality.