Builder's Closing vs. Resale Closing: Key Legal Differences

Purchasing a newly built condominium or home from a builder is fundamentally different from a resale transaction, and understanding these differences is essential for buyers.

The most significant distinction is the two-stage closing process for new construction condominiums: interim occupancy closing and final closing.

Interim occupancy occurs when your unit is ready for you to move in, but the condominium corporation hasn't yet been registered. During this period, you pay an 'occupancy fee' to the builder — similar to rent — which covers the builder's mortgage interest, property taxes, and condominium maintenance fees. You're living in the unit, but you don't yet own it.

Final closing happens when the condominium corporation is registered and title transfers to you. This is when you formally take ownership, your mortgage funds are advanced, and all closing costs (including land transfer tax) become payable.

For freehold new construction, the process is simpler — there's typically one closing, but you'll still need to carefully review all builder documents, including the Agreement of Purchase and Sale, disclosure statements, and any amendments.

Having an experienced real estate lawyer review your builder purchase agreement before you sign is critical. These agreements are drafted in the builder's favour, and understanding your rights under the Ontario New Home Warranties Plan Act (Tarion) is essential.