Different Types of Condominiums

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Explore:  Canada Condominiums Leases

In Ontario, there are a number of types of condominiums that may be developed.  Under the Condominium Act, 1998, the types of condominiums provided for fall into two categories: leasehold and freehold.  There are then four subcategories of freehold condominiums: standard, phased, common elements, and vacant land.  This post will provide a brief overview of the common condominium arrangements.

Leasehold Condominiums

There are some institutions that are unable to sell their land; for example, universities and hospitals.  The Leasehold Condominium concept was designed to give these institutions more options with respect to land use and an additional source of revenue.

The owner of the land leases out the property to the declarant, the body establishing the condominium.  The term of the lease cannot be shorter than 40 years less a day nor more than 99 years.  Since the declarant only holds a leasehold interest in the property, that is all that can be transferred to potential purchasers.  The purchasers of the units do not “own” the units, but would really only have leasehold interests.

Leasehold Condominiums are quite rare.

Freehold Condominiums

The term “freehold” really means that the declarant/developer owns the lands on which the condominium is built, rather than merely leasing the lands.  Because the declarant owns the land, ownership of the units of the condominium can be transferred to potential purchasers.  Freehold condominiums can be found as high-rises, low-rises, and row condominiums.  The following are subcategories of freehold condominiums.

Standard Condominium

This type of condominium is generally comprised of buildings that are subdivided into units and common elements.  The lands surrounding the buildings are also usually designated as common elements.  Some of the common elements may be designated for the exclusive use of one of more of the owners; however, the common elements are generally for common usage.  Examples of common elements in a standard condominium are: hallways, walkways, driveways, visitor parking, and recreational facilities.  Owners of the units have an ownership interest in the common elements, in addition to their units, and have obligations to contribute to the maintenance and repair of the common elements.

Phased Condominium

A Phased Condominium is a standard condominium that is developed in phases as the project is completed.  This type of condominium allows a developer of a larger condominium project to begin to sell individual units before the entire project is completed.  The developer has up to 10 years to add to the condominium project and amend the declaration and description.  Ideally, each phase of the condominium should have all the necessary services to be self-sufficient, in case the developer does not choose to go through with the additional phases as planned in the project.

Common Elements Condominium

In this type of condominium, there are no units but only common elements.  The common interest in the common elements is attached to existing parcels of land known as “parcels of tied land” or “POTLs”.  The owners of the POTLs have obligations to maintain the common elements, and do so through common expenses.  However, the condominium corporation in a Common Elements Condominium has no authority to make rules with respect to the POTLs themselves.  Common Elements Condominiums are generally used where the owners of existing properties want to create and share the use of and responsibility for a facility or services.  For example, a group of homeowners who want to establish a community park for the use of the residents in the neighbourhood may do so through this type of condominium.

Vacant Land Condominium

A Vacant Land Condominium consists only of bare land at the time it is registered.  Portions of the land are sold as units of the Vacant Land Condominium and can then be constructed upon.  The declarations of the condominium would set out the rules and restrictions for the type of structures that could be constructed.  This type of condominium is generally used for condominium projects that are similar in design and use to a regular plan of subdivision.  Essentially, the land itself, not just the house, is the condominium unit.

Conclusion

There are benefits and disadvantages to the types of condominiums set out above.  Developers should consider which type of condominium is best suited for their projects.  As a potential purchaser, you should inquire as to the type of condominium you are purchasing to better understand the rights and responsibilities of condominium ownership.