Types of Condominiums: Part 5 – Common Elements Condominiums
This is the last in our five-part series on the types of condominiums. In the first post we briefly discussed the two main types of condominiums (freehold and leasehold). In the second post we discussed the most common type of condominium – freehold standard. The third post was about phased condominiums. The fourth was about vacant land condominiums. This final post is about common elements condominiums.
Common Elements Condominiums
A common elements condominium is one that does not contain a single unit. It is comprised only of common elements. How does anyone own a part of the condominium if there are no units? Instead of units, the owners own parcels of tied land (called “POTLs”) and the common interest in the condominium attaches to their POTL instead of the unit.
An example might help explain where these can be useful. These types of condominiums are used frequently with single detached homes where the roadway and sometimes amenities are on the common elements. It provides a relatively easy way for all the homeowners to legally share ownership of the road and amenities without some of the hassles that come with other types of ownership structures, like where the amenities are owned through a corporation and the homeowners own shares of it. It also provides for better dispute resolution mechanisms if, for instance, the condominium does not properly maintain the road or amenities on the common elements. With other types of structures, it could be difficult and costly to pursue legal action to have the road or amenities properly maintained if the condominium fails to do so.
Unlike the other types of condominiums, most of the Act does not apply to the POTLs in a common elements condominium because the POTLs themselves are not part of the condominium plan. This means, absent a contravention of the Act (i.e., dangerous condition) or restrictive covenants on the property, there is often little that a condominium can do about undesirable activities in the POTLs. That said, the Act does apply, with necessary modification, in some situations such as:
- Insurance: The owners are responsible for insuring their POTLs as well. This means there is no need for a standard unit by-law for a common elements condominium.
Future for Common Elements Condominiums
My unpopular opinion (which is not shared by all lawyers even within our firm) is that most people are not ready for condo-in-condo schemes because of the complexity. The Act does not address some of the unique issues that arise with condo-in-condo, such as the voting rights. Who votes for the standard condominium with respect to the common elements condominium? Is it the standard condominium’s board of directors? Do the unit owners of the standard condominium vote and a majority rules? See our previous posts on condo-in-condo for more information on this topic.