If any one has been following the news, it looks like condo sales have been very strong this year. I don't know if it's just hype or if it's legitimate, but with many first time condo buyers out there, some explanation of the closing process might be needed.

Usually, a condo's closing will occur in two stages. The first is called "occupancy" or "interim closing", which means that the purchaser usually pays a further deposit along with monthly fees for the right to use the unit. The purchaser does not have title or ownership of the unit, but has not paid the full price. Sometimes the developer may skip this step if they are too far behind schedule. The second stage is called the final closing, and the purchaser receives title or ownership to the property at that time.

The biggest complaint that many first time buyers have is that the occupancy date is continually postponed as the building is not ready. One cautionary tale comes from a client of mine who was told that his occupancy would occur in June and was so confident that his condo was going to be ready that he entered into an agreement to sell his house in June, on the same date as his expected occupancy. About 2 months before the occupancy was supposed to occur, my client received a notice that his closing would be pushed back until September, leaving him without a home for 3 months.

Another of my clients experienced something similar but more connected to the final closing. He had sold his previous condo to move to another condo near work. The condo was already in occupancy so he was able to move in right away. As part of his sale, his bank allowed him to port (or transfer) his existing mortgage with its terms and interest rate to the new condo. However, in order to get this deal, final closing had to occur within 90 days from the date of his sale. Unfortunately, it occurred approximately 120 days after his sale, and he had to pay a higher interest rate.

The lesson here is not to count on the closing dates specified by the builder or developer. They may make a lot of great promises at the sales office, but you should use your 10-day cooling off period to review the agreement with a lawyer and determine how much they can delay the closing dates if you are concerned about that.