Condominium Management Law Blog

Types of Condominiums: Part 5 – Common Elements Condominiums

byMichelle Kelly

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.

 

Key Features & Differences

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:

 

- Liens: The condominium can register a lien against the POTL if the owner defaults in their obligation to contribute toward the common expenses. 
- Maintenance and Repair: Sections 89, 90, and 91(a) & (d) do not apply to a common elements condominium. Instead, Section 144 defines the maintenance and repair obligations. The owners are responsible for maintaining and repairing their POTLs. Subject to the declaration, the condominium is responsible for maintaining and repairing the common elements.

- 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

While common elements condominiums were quite rare until fairly recently, developers are starting to use them in place of shared facilities agreements. For example, instead of registering 4 standard condominiums with a shared facilities agreement the developer will register a common elements condominium with 4 POTLs and register a standard condominium within reach POTL. This eliminates the need for a shared facilities agreement because the shared facilities are the common elements of the common elements condominium and each of the standard condominiums is obligated to comply with the governing documents for the common elements condominium because the standard condominium is constructed inside a POTL in the common elements condominium. 

 

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. 

Well, this was the last in our series on the types of condominiums. We hope you found it informative. As always, if you have any ideas for future posts (or even a series idea), please let us know. 

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