New Builder Condo Closing Steps
Things to Know About Builder New Condo Closing in Mississauga
Purchasing a new builder condo in Mississauga is a detailed process, with multiple stages before you can officially call your unit home. Understanding key milestones, such as Interim Occupancy, Final Closing, and other logistical aspects will make the journey smoother. Let’s delve into the intricacies of each phase.
Interim Occupancy and Final Closing
When you purchase a pre-construction condo, you’re likely to encounter two closings: Interim Occupancy and Final Closing.
Interim Occupancy occurs when the unit is ready for habitation, but the condo building hasn’t yet been officially registered. Although you can move into the unit, the title hasn’t transferred to your name, meaning you don’t legally own the property yet. The builder maintains ownership during this phase. You’ll still live in your new condo and use all its features, but your status is more like that of a tenant until Final Closing.
Final Closing happens when the condo building is fully registered with the city. Only after this registration can the title of the property be transferred to your name, signifying full ownership. At this point, your mortgage officially kicks in, and all other ownership obligations (like property taxes and condo fees) become your responsibility.
Understanding this distinction is crucial, as it affects how you handle legal, financial, and property matters during each phase.
Mortgage Application
Obtaining a mortgage is an essential part of purchasing a condo. In the case of new condos, the mortgage application process might differ slightly due to the involvement of builders and their collaborations with financial institutions.
Blanket Assessment: Some builders partner with financial institutions to simplify the mortgage approval process. A Blanket Assessment means the lender has already pre-approved the building, so the process of evaluating the property’s value is faster. This can result in quicker mortgage approvals with reduced underwriting time.
Locking in Your Rates: The value of your unit will likely appreciate between the time you purchase it and when you take ownership, which could be two to four years. Therefore, it’s important to revisit your mortgage lender around Interim Occupancy to lock in a favourable rate before the final closing date.
Mortgage on Final Closing: Once your unit is registered, your mortgage officially begins. Your lender will provide the funds needed for Final Closing, which also covers any legal and land transfer taxes.
Occupancy Fees During Interim Occupancy
Although you don’t officially own the condo during Interim Occupancy, you’re required to pay an occupancy fee to the builder. These fees cover the cost of living in the unit before title transfer and consist of three parts:
Interest: This is calculated on the unpaid portion of your condo’s purchase price at a rate prescribed by the Condominium Act of Ontario. The interest rate typically reflects a one-year conventional mortgage rate.
Estimated Property Taxes: Since you’re living in the unit, the occupancy fee includes an estimate of municipal property taxes.
Common Expenses: You’ll also contribute to the building’s monthly maintenance fees, known as common expenses, which cover the upkeep of shared facilities like elevators, parking garages, and landscaping. These expenses are based on the projected first-year budget for the condo.
Your lawyer will receive an Interim Statement of Adjustments that breaks down the total monthly occupancy fee. You’ll likely be asked to provide post-dated cheques to cover these fees until Final Closing.
Key Pick-Up and Utilities Setup
Before moving into your new condo, there are a few logistical steps to complete:
Key Pick-Up: To receive your keys, all legal documents must be signed and the required funds paid. Once these requirements are met, the builder notifies Property Management, which arranges the key pick-up. This usually takes place at a temporary office within the building. You’ll need a valid photo ID, such as a driver’s licence, to claim your keys. If you’re unable to pick them up yourself, you can designate someone to collect them on your behalf by providing a written authorization. Your real estate lawyer may need to prepare a Power of Attorney in such cases.
Setting Up Utilities: Before you can move in, you’ll need to set up accounts for utilities like gas, hydro, and water. Many condo units are sub-metered, meaning each unit has its own utility meters. Make sure to provide your lawyer with proof of account setup for these services, as this is often required before the keys are released.
Final Closing and Title Transfer
Once the condo building is fully registered, the process shifts to Final Closing. This is when legal ownership of your unit transfers to you, and your mortgage formally starts. Key considerations include:
Title Transfer: During Final Closing, the title of the property is transferred into your name. You become the legal owner, and your mortgage payments commence.
Land Transfer Tax: At Final Closing, you are responsible for paying land transfer taxes. The amount is based on the purchase price of your condo and can represent a significant portion of your closing costs. Be sure to budget for this expense in advance.
Closing Adjustments: Additional fees, such as property taxes, development charges, and common expense adjustments, are also settled at this time. Your lawyer will handle these details and ensure everything is in order.
Moving into a Community Under Construction
After Interim Occupancy, it’s common for parts of the building or the surrounding community to still be under construction. Builders may have received partial occupancy permits, allowing residents to move into completed units while construction continues on other parts of the building or amenities. For instance, the lobby or communal areas may still be in progress, or nearby streets may be undergoing development.
During this period, builders are required to ensure the building meets health and safety standards, so you can expect precautions to be in place for the safety of residents, workers, and visitors. It’s essential to remain patient during this phase, as the condo’s full potential may not be realized until construction is complete.
Tarion Warranty and Pre-Delivery Inspection (PDI)
New builder condos in Ontario are protected by the Tarion Warranty Program, which covers defects and other construction-related issues. The warranty extends to both individual units and common elements.
Pre-Delivery Inspection (PDI): Before you move in, you’ll participate in a Pre-Delivery Inspection (PDI) with the builder. This allows you to inspect the condo for any deficiencies, such as scratches, missing items, or incomplete work. The PDI also gives you the chance to get acquainted with the building’s features, systems, and materials. Make sure to document any issues, as they’ll be important for future warranty claims.
Keep track of any new problems that arise after moving in, as they may also be covered under the warranty.
Interim Occupancy Restrictions and HST Rebate
During Interim Occupancy, you may face certain restrictions. For example, you might not be able to lease or rent out your unit without permission from the builder. This limitation protects the builder’s interests and ensures the community isn’t prematurely flooded with rental units before registration.
HST Rebate: If you intend to live in the condo, you’re eligible for the HST Rebate on new homes. However, if you plan to rent or sell the unit, you may need to repay this rebate to the builder. Investors who rent out their units can reclaim part of the HST by submitting the necessary documentation, such as a lease agreement, to the Canada Revenue Agency (CRA).
Assignment Sales Opportunity
Interim Occupancy is often seen as a window of opportunity for Assignment Sales. This allows you to sell the unit before Final Closing, which can be a good option if your plans have changed or if you want to cash out on your investment. The benefit of selling at this stage is that you avoid occupancy fees and closing costs, but you’ll need to check your builder’s Assignment Clause to confirm if this is permitted.
Condo Insurance
Although the condo corporation insures the building’s common elements (like the lobby or gym), it’s your responsibility to insure your individual unit. A comprehensive condo insurance policy will cover:
Personal property: Your appliances, furniture, and belongings within the unit.
Liability: Protection against claims if an accident in your unit causes damage to other units or the building.
If you plan to rent out your condo, ensure your tenant has adequate insurance coverage as well, and request proof of their policy.
Property Management and the Move-In Manual
During the first year, the builder typically appoints a Property Management company to oversee the condo’s operations. Once the building is registered, the unit owners form a Condominium Board that selects a Condominium Corporation to manage the property moving forward. In some cases, owners may choose to retain the builder-appointed management company if they are satisfied with their performance.
On your move-in date, you’ll receive a Move-In Manual. This guide provides detailed information about your unit’s systems, including:
- Flooring and finishes
- Plumbing and HVAC systems
- Security systems and parking remotes
Review this manual thoroughly, as it will help you understand your condo’s features and how to maintain them.
Conclusion
Purchasing a pre-construction condo in Mississauga involves various stages, from mortgage applications to final ownership. By familiarizing yourself with Interim Occupancy, Final Closing, and other important steps, you can navigate the process
