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Jan 1, 2011|Article

What is a Condominium?

The condominium landscape in Ontario has changed drastically since the first Condominium Act was enacted in 1967. While the former legislation restricted the types of condominiums that could be created, the Condominium Act, 1998 has greatly expanded the options available for condominium developers and municipalities. While many of the provisions applicable to standard condominiums apply to all types, there are several distinguishing features of non-standard condominiums that every board of directors, property manager, and professional servicing condominiums should be aware of when working with them. The purpose of this article is to indentify some of the distinguishing features of each type. 

Leasehold Condominiums 

Leasehold condominiums are governed by Part XIII of the Act. A leasehold condominium is one where the units are subject to leasehold interests. The unit owners have a right to occupy the units under a lease, but not own them. For simplicity, they are still referred to as “owners” under the Act. 

While leasehold condominiums are very rare, representing less than 1% of all condominiums in Ontario, there are a few items worth noting. First, the Residential Tenancies Act does not apply to the lease between the owner of the land and the unit owner. Second, the declaration must contain details on the lease, such as the term, rent amount, and formula for calculating increases in the rent. The entire lease may be included within the declaration. Third, an amendment to the declaration or description requires the consent of the owner of the lands if the amendment would affect the leasehold interests. Fourth, a leasehold condominium may be terminated in three ways:

  1. by consent;
  2. by the owner of the lands with a court order if the condominium corporation fails to pay the rent or comply with a court order; or
  3. upon expiration of the term of the lease. 

Freehold Condominiums 

The term “freehold” is often used as a marketing gimmick to suggest purchasers are getting more than they would ordinarily receive when buying a unit, such as a front or back yard. However, a more accurate term for these types of condominiums would be a “whole lot” or “lot-line” condominium where the owner’s unit includes more than just the building, but also some of the land surrounding it. The legal definition of a freehold condominium applies to all condominiums that are not leasehold condominiums (representing over 99% of condominiums in Ontario). In a freehold condominium, the units and common interests are owned by the unit owners in “fee simple”. This means every owner obtains title to the units when they purchase them from the declarant or previous owners. There are four subtypes of freehold condominiums in Ontario: Standard, Phased, Vacant Land and Common Elements. 

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