The purchase of condominium unit
The term “condominium” generally describes a system of ownership for a multi-unit building whereby each unit is owned separately by the individual who purchases it, while the “common elements” (lobby, walkways, elevators, etc.) are owned in common by all the unit owners. Each unit owner has an undivided interest in the common elements, which is in a fixed proportion— usually the proportion that the size of the unit bears to all the units in the project.
There is generally two stages to a new build condominium closing.
The Interim closing
In the first stage, the buyer is required to take possession of the purchased units on the “interim” closing date. At the interim closing, the buyer will pay to the seller the balance of the “down payment” portion of the purchase price (that is, the purchase price minus the buyer’s intended mortgage amount and the deposit moneys the buyer has paid). Some closing documents are usually exchanged between the buyer and seller at this time, such as an “interim occupancy agreement,” an interim statement of adjustments, and post-dated cheques for the monthly occupancy payments.
The final closing
The second stage of the closing occurs after the condominium’s declaration and description have been registered in the land titles office. At this “final closing,” payment to the seller is completed, title is transferred to the buyer, the buyer’s mortgage is registered, and further documents, including a status certificate, will be exchanged by the parties. The interim occupancy agreement terminates when the final closing is completed.
Why two stages? Why is the two-stage closing procedure required? There can be a lengthy delay between the time that the first units become ready for occupancy at the start of the first stage, and the date that the land titles office is ready to begin unit registrations (the second stage). The builder will not want these completed units sitting idle because the builder is paying the carrying costs of them. The interim closings therefore begin as soon as the common elements and at least some of the dwelling units are approved for occupancy.