Today I learned that there is something called occupancy fees in Canada when you buy a pre-construction condo.
So, when the unit is complete and it's time to move in, supposedly you are not the owner yet and need to wait till the builder registers the whole building with the government and you officially become the owner. Until that happens, you have to pay "occupancy fees" to the builder which is like paying rent and that money doesn't even goes toward your mortgage, which means that this is free money that you are giving to the builder.
Because of the high interest rates, this occupancy fees is super high right now, around 3500 CAD when the max rent for the same unit will be around 2300 CAD.
How is this even legal?
Its legal because you sign a contract and allowed in Condominium Act with a calculation on occupancy fee. It is allowed because during this time Builders own the building and when you sign the purchase contract, you agree to occupy on that date. That said most builders allow you to rent that property. That way you can save some money if your property is in a location that is under rental demand.
Interim fee is the still the least bothersome part of the purchasing a pre-built property. The more bothersome part is typical purchase agreements allow builders to make massive changes to the layout of the condo and location of common amenities like pool, gym, parking location, locker location etc. The legal argument used there is called "material to the contract" and that is not well defined and differs from case to case. So, yes, if you thought you will have a balcony facing the sea, you may be suprised to find that builder is allowed to change that to face a construction site by moving it to another facing of the building... possibly to save construction cost.
The only reason why people go for presales contract is FOMO and the constant absurd rise in the condo prices and rentals. If that is not there, builders will be forced to negotiate and behave and actually provide services. They will have massive sunk cost in the project.
I personally, will NEVER buy an under construction condo. All new condos in Canada are stupidly sized (like 3 bedroom condo in 700-800 Sqft??? WTF???), not meant for living and have stupid construction with shoddy practices. Actually no condo built after 2003-05 in canada is worth living. They are simply shoeboxes in the sky. Or townhouses that are too stupid with 4 floor layout to save land space (typically a basement, main floot, first floor and "loft floor"). These narrow deep and tall abominations are sold at a premium to buyers. If you want a newly built place, buy the land and construct yourself. Otherwise what you will get a unit will be absolute shit. Best Condos/Townhouses in Canada are those built in 70s 80s and 90s (if you are not on western shore.. 90s condos of western shore have an additional issue of failing envelope due to building code stupidity of that time.). At best look for early 2000s condos. Anything post 2008 is SHIT. Just avoid it. If it is past 2015 or 16, just do not even look at it. It will small, overpriced and stupidly laid out.