While buying a new condo from the builder it is important for you to know that condos, unlike houses, have two types of Closings. The first closing is called the Interim Closing which occurs at Occupancy, when the Municipality authorizes people to actually occupy the condo units. The way that it works is that when the developer undertakes to build a condo development project they go to the Municipality and submit a site plan which the Municipality Registers thus it becomes a Registered Site Plan setting out exactly what the developer is promising to deliver to its clients upon completion.
The developer then sells the suites as Pre-sales, even though the construction has yet to begin. Once enough units are sold, usually 60%, the construction for the building starts while builder continues to sell the remaining units. The developer does not received any money from buyers yet, as all deposits go into the Trust Account. Builder usually finances the construction of the project by borrowing money from his financial institution. Once the builder completes the construction of the project the municipality has to verify that it is sufficiently completed to allow people to occupy it and issue the Occupancy Certificate. The purchasers are subsequently notified of their Occupancy Date.
During that interim period, also known as Occupancy Period, the purchasers undertakes a portion of the developers mortgage with his bank, also known as Phantom Mortgage, equal to their proportionate share of the overall condo. This money is called an Occupancy Fee and is roughly equivalent to a mortgage that the purchasers would undertake the monthly maintenance fee and a factor for the property tax. In total it will be about the same as if a buyer took the mortgage. However, the purchaser cannot get a mortgage at this point in time because there is no Title to the property, and hence the banks cannot issue a mortgage to the purchaser.
This Occupancy Fee does not service your mortgage and can at best be regarded as Rent. However, in any case the first months of a mortgage are pretty much all interest anyway. The Developer does not receive his money until the building is duly registered. Interim occupancy date is the target date upon which it is estimated, in the agreement of purchase and sale, that the condo unit will be completed to allow occupancy to the purchasers. This date is dependent upon a number of factors, including the achievement of a threshold level of sales to permit the commencement of construction of the condominium building, and the particular location of your suite.
It is builders responsibility to keep the buyers up-to-date on the progress of the development, who may be given a revised occupancy date, once it has been established. Even though the purchasers move into their new home on the confirmed possession date, they will still not be getting title to the property till the condominium is registered. Builder can only give purchasers Title to their property, once the Municipality inspects the premises to ensure that the construction has been done according to the specifications and the facilities have been delivered exactly according to the original Registered Site Plan. The municipality normally takes few months to inspect the premises and carry out its survey in order to ensure that it conforms to the approved plan. Once the Municipality completes its due diligence it registers the Building. At this time the purchasers receive title to their property and the developer gets the money; this is known as the Second Closing. (Copyright 2011 Latif Nizamani) | 
