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Richards + Company provides legal services to individuals and businesses in Edmonton and throughout Alberta. We actually have clients from all of western Canada. Our areas of focus and expertise include Real Estate (Residential and Commercial); Corporate (e.g. incorporations, amalgamations, acquisitions, etc); Commercial (bank financing, land development, business purchases, limited partnerships); and Wills & Estates.

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Bare Land Condos: and dogs and windows

July 6, 2017

 

Who owns the dog? Ok, you do. Good answer. Who owns the window that the dog is looking through? Careful. It's not as simple as you think. This blog and next we will address a couple of issues arising with respect to bare land condominiums (or bare land strata titles as some know them). Most provinces allow for some form of bare land concept in their respective condominium legislation.

 

WHAT IS IT?

A regular condo unit is typically defined by the inside dimensions of the walls of a residence - very simply speaking, the owner owns everything inside. All the rest is Common Property with shared ownership between all unit holders. Your dog is straddling your property and the common property too. The Common Property is the responsibility of the condominium corporation and the board levies fees to maintain and repair the common property. 

 

A bare land condo unit (or strata title), however, is comprised of land, very much like a non-condominium style title. So in a bare land condominium, buildings and at least part of the landscaping are likely inside the unit boundaries, and therefore are not Common Property.  Your dog is hanging out entirely on your property.

 

WHAT'S THE PROBLEM?

And there’s the rub: if all the stuff inside the unit boundaries isn’t Common Property, does that mean the owner is responsible for all the costs of maintenance? Most developers build condos and most people buy condos to have carefree living. They want certainty. A condo fee is levied and is expected to cover the major repairs and maintenance of the property. No mowing the lawns or shoveling the snow either! 

 

This could be a problem! And it was, at least in Alberta, for a few miserable months.

 

The Alberta Queens Bench case (Maciejko v. Condominium Plan No. 9821495, 2012 ABQB 607) was rendered with respect to a dispute between owners in a bare land condominium corporation and the corporation itself.

 

The bylaws provided that the condominium corporation, rather than unit owners, were required to repair and maintain the exterior of the individual units. So it essentially operated like a traditional condominium. The complex was developed and marketed as a “care-free” living opportunity. The court acknowledged it was a great marketing idea, but ..…

.

The bylaws created a new class of property called “managed property,” which treated the “managed property” as if it were Common Property. Here was the court’s issue: the term “managed property” was not defined in the Condominium Property Act. And dealing with “managed property”  in same way as Common Property was not technically permitted by the Condominium Property Act. As a result, the court ruled that the condominium corporation did not have the authority to pre-collect money from owners and deposit it into the reserve fund (a fund raised for the repair and maintenance of property that is owned by the condominium corporation - i.e. common property).

 

They actually said that the condominium corporation, without the legal authority to raise funds for the “managed property” improvements, would have to fund these repairs and maintenance costs on a pay-as-you-go basis (or the individual owners had to take care of it). I know what you’re thinking. The court did too - they recognized that this was bizarre outcome. But hey: it was the law.

 

SO WHAT WAS THE SOLUTION?

Everyone was disappointed in this result and the law was recently changed to reflect previous reality. So, here is where we now stand: all responsibility for the exterior repair and maintenance of bare land units can, as before, be transferred to the condominium corporation by properly-worded bylaws, essentially creating a ‘typical’ condo arrangement. The condominium corporation can collect fees for upkeep and repair/maintenance of all Common Property as well as the defined “managed property”. 

 

SO WHAT'S THE POINT OF ALL ALL THIS LEGAL TALK?

Here is the danger, and what lawyers and condo buyers must be leery about: if a condominium corporation is not required or authorized by its bylaws to repair and maintain the structures within the unit boundaries, funds for their repair and maintenance cannot be included in the reserve fund levies. It’s pay as you go. There are a few things lawyers hate about this, one being that most people have not reviewed the bylaws before they agree to buy a condo and have no clue what they are getting. Going back a step, most people don’t even review title or investigate whether the condo is a bare land condo or regular condo, so wouldn’t know what to look for in any event. Real estate purchase contracts are rendered unconditional before a significant matter is properly canvassed. While most condo complexes will have bylaws that do transfer responsibility for managed property to the condominium corporation, not all will. Beware!

 

Next blog we will address another bare land condo issue. Hint: if a bare land condo is in many ways similar to a regular non-condo lot (owner owns everything within the unit/lot lines), what will a buyer and his lender want to obtain?

 

Materially changed but original article published in REIN Magazine

 

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