“Back to Basics” is a new series that will appear regularly and examine common, but rarely considered, issues.
The option to create different types of condominium corporations was first introduced by the Condominium Act (the “Act”) in 1998. Once the Act came into force in 2001, developers had the option to create one of four alternate types of condominiums:
- Common Element;
- Vacant Land;
- Leasehold; or
- Phased.
Over the past two decades, the common element condominium corporation (“CECC”) has become the most popular of the alternate condominium corporations but it remains a mystery to many.
A CECC differs from a standard condominium corporation in that there are no units, only common elements. It is unique among all types of condominium corporations as it is the only type in which there are no units.
A number of freehold parcels of land are “tied together” and are able to make use of, and are responsible to maintain and repair, the common elements. These parcels of land are usually referred to as “POTLs”. Once created, the POTLs cannot be severed from the CECC unless amendments to the declaration and description are approved and registered.
Practically speaking, a CECC can only be utilized for detached, semi-detached or townhouse buildings, as legal ownership of POTLs cannot be divided across vertical boundaries. Subject to restrictive covenants that may be registered against title to all of the POTLs at the creation of CECC, owners of POTLs have considerable latitude as to how their own property will be developed and maintained over time.
CECCs have found favour among property developers and purchasers alike in vacation communities and new urban developments. In vacation communities, CECCs can be useful to allow owners to develop at their own pace and taste, and the common elements can include amenities like a golf course or a ski hill. In urban areas, CECCs can be useful to develop new communities and provide basic features, such as roadways, lighting and controlled access.
Common questions relating to CECCs can be grouped into three categories:
- The enforceability of restrictive covenants registered against POTLs;
- The ability to secure unpaid common expenses against title to POTLs by registering a lien under section 85 of the Act; and
- The ability of the CECC to regulate the maintenance, repair or appearance of the POTLs.
Thankfully, both the Act and case law are abundantly clear that unpaid common expenses can be secured by way of a condominium lien against a POTL. This, unfortunately, has come to the surprise of many owners in CECCs.
On the other hand, CECCs are not like any other types of condominium corporations, and Boards of Directors and fellow owners are often dismayed at the lack of available enforcement measures against a fellow POTL owner who fails to upkeep their property. Overall, CECCs offer a unique lifestyle that can provide the best of traditional home ownership and condominium living, while posing their own distinct challenges.
Finally, restrictive covenants are often open to a variety of interpretations and are usually fact dependent. Restrictive covenants will typically address matters such as exterior finishes, landscaping and fencing for a set number of years. Issues with respect to the interpretation or enforceability of restrictive covenants should be discussed with the CECC’s legal counsel.
