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On May 5, 2001, when the Condominium Act, 1998  came into force, it created the real estate entity known as a Parcel of Tied Land (“POTL”). A POTL is a freehold parcel of land, or a standard condominium unit, which is inextricably tied to a share in a Common Elements Condominium (“CEC”). The POTL is “tied” to the share in the CEC in the sense that the owner must transfer or mortgage them together.

A CEC consists of only common elements, not units. The property owned by a CEC is only limited by the developer’s imagination. It can range from something as simple as a shared parking area to a marina or golf course. In many cases, the CEC includes roadways and underground sewer services, which are maintained at the CEC’s expense. You can most likely expect to be dealing with more POTLs in the future, in both urban and rural settings.

If your client is purchasing or mortgaging a POTL and its interest in a CEC, you are essentially dealing with two separate properties. In addition to the searches required for the POTL, you also need to conduct a title search of the CEC’s property and obtain a status certificate from the CEC.

When completing a TitlePLUS application to insure a POTL and its interest in a CEC if the POTL is a condominium, under “Property Type,” choose “Condominium.” If the POTL is not a condominium, choose “Freehold.” You can then complete the application in the usual way. A description of the interest in the CEC should be included in the “Together With” section of the Legal Description.

When you submit an application to insure a POTL and its interest in the CEC, it is important for you to insert an insure over request in the application, notifying TitlePLUS staff that the property is a POTL with an interest in a CEC. The application will then be manually reviewed by a member of the TitlePLUS Underwriting Group, who will contact you to confirm that title was searched and a status certificate was obtained for the CEC. The TitlePLUS Common Elements Condominium Endorsement, which is provided at no additional charge, will then be attached to the policy. This endorsement contains coverage with respect to the CEC.

When reviewing the condominium documents of the CEC with your clients, it is a good idea to bring to their attention the fact that while they will be entitled to the benefits of the CEC’s facilities, they will also be responsible for a share of the future operating costs, maintenance costs and liabilities of the CEC. This is especially important because the common elements of a CEC are often more extensive and more expensive to maintain than the common elements of an older standard condominium.

Categories: Real Estate