Common Element Condominium Corporations (or “CECC”’s) are becoming more prevalent in Ontario, particularly in new freehold town home projects and waterfront developments.
A CECC consists of only common elements. There are no ‘units’, rather CECCs are comprised solely of a specific ‘common element’, which may include roads, parking facilities, a clubhouse, a marina,etc. These common elements are tied to a separate property called a ‘parcel of tied land’ (or “POTL”s). The POTL could be a townhome or detached home, and doesn’t have to be contiguous to the CECC property, as long as it’s within the same land registry division.
CECCs are attractive to developers because they circumvent the need to satisfy municipal road standards required in a traditional subdivision. Accordingly, developers can benefit from fitting more units into a particular land area, and reducing their road construction costs. At a practical level developers often work with their solicitor to create and sell separate parcels of tied land to each purchaser (in most cases freehold townhomes), which are not part of the CECC. They then create a CECC which includes all the facilities, roads, services, etc., the costs for which will be paid by the purchasers of the POTLs.
The owners of the POTL are responsible for their share of the common expenses relating to the CECC, which is no different than the treatment of expenses in a traditional condominium corporation. Liens for unpaid common expenses are treated similarly and will rank in priority to any encumbrances registered against the POTL, including first mortgages. In addition to sharing the costs of maintaining the CECC’s facilities, however, owners of the POTLs also share the ownership, use and enjoyment of these facilities.
A CECC is permanently tied to its corresponding POTL so that a POTL cannot be sold separate and apart from its interest in a CECC and vice versa. The common interest relationship cannot be severed – the benefits and the burdens run with the land unless the condominium is terminated under the Condominium Act.
Because the POTL is not a unit in a condominium, the purchase of a POTL and an interest in a CECC is completed using a standard agreement of purchase and sale for freehold properties. As such, certain condominium rules will not apply. While the Ontario Real Estate Association Agreement of Purchase and Sale will appear unchanged in many respects, the sale will include schedules (or in some cases, a separate agreement) addressing the purchase of the interest in the CECC.
For assistance with CECCs or other Condominium issues, contact me Alla Tchouiko 416-457-6870 or your lawyer.