Condominium developers may be required by the City to purchase a Parcel of Tied Land (“POTL”), as authorized in the Condominium Act, 1998 (the “Act“), to be tied to their common elements. Conversely, condominium owners currently enjoying an informal arrangement of shared costs for common elements may want to formalize it by exploring a Common Elements Condominium Corporation (“CECC”). What is a POTL and a CECC, how are they linked, and what are the advantages of having them if you are a condominium developer or condominium owner?
A CECC consists solely of common elements, not units. The property owned by a CECC is only limited by the declarant’s imagination. It can range from something as simple as a shared parking area to a golf course. In many cases, the CECC includes roadways and sewer/drainage services, which are maintained at the CECC’s expense.
The owners of a common interest in the CECC are required to own a separate POTL in freehold within the same Land Titles Division to which their common interest is attached. This could be a lot with a detached home, a townhome, or a vacant lot for example. POTL lands do not have to be contiguous with the CECC, but must be in the same Land Titles Division. When owners of freehold POTL properties take title, they also receive a fractional common interest in the CECC. The POTL property owner’s interest in the CECC comes with the right to use (and pay for) CECC facilities. A POTL property owner’s interest in the CECC cannot be severed from the owner’s property.
Various terms can be contained in the condominium declaration that creates the CECC, including maintenance fees for a storm water retention pond for example. Rights and obligations to financially contribute to the upkeep of the facilities will run with the owner’s freehold POTL property. In the event that an owner refuses to pay common elements fees to the CECC, a condominium lien can be registered on the owner’s freehold POTL property.
Section 142 of the Act confirms that a transfer of an interest in a CECC is not a subdivision and therefore does not require approval of the municipality or local planning authority under Section 50 of the Planning Act. In the event that an owner of a freehold POTL property attempted to sever their own respective piece of land into smaller parcels with consent, Subsection 139(4) of the Act provides that the owners of the new smaller parcels will be joint owners of the common interest that attached to the original parcel. The common interest in the CECC is not severable from the owner’s separate parcel of tied land to which it is attached.
Typically, the Common Elements Condominium Corporation concept is used where the owners of existing properties wish to create and share the use of and responsibility for a shared facility or service. A CECC is an attractive solution to resolving ongoing maintenance costs of shared real estate assets or services.
This article is not intended to provide legal advice.