After shopping around a bit, we’re confused. What’s the difference between a vacant land condo and a POTL? – CONDO SHOPPING
DEAR SHOPPING: Defining styles of condominium ownership can be confusing. A vacant land condo is similar to a POTL (Parcel of Tied Land) in many ways, so let’s start with what the two types have in common.
According to Ontario’s 1998 Condominium Act, a vacant land condo and a POTL are both types of freehold condominiums. This means that homeowners own the brick-and-mortar components of their home, including the roof and outside walls, and are responsible for their own interior and exterior maintenance. Vacant land condos and POTLs are also “common elements condominiums”, which means homeowners pay a monthly fee to maintain shared amenities within the complex. Common elements can be as simple as streets and sidewalks, or as involved as tennis courts, parkettes and community centers.
The differences between vacant land condos and POTLs emerge when you look at the land they sit on.
As the name implies, a vacant land condo is a piece of bare land that is sold and used to construct homes. Under this type of ownership arrangement, a corporation can register the land and sell it before any building takes place. A buyer purchases a specific piece of land within the complex, much as they would a building lot. Units may be purchased prior to construction, or there may be a house on the land when the homeowner buys it.
If a homeowner buys the unit prior to construction, they may have a say in the nature of the house that will be built. Vacant land condos are unique in that they typically offer an owner the ability to personalize the outside of their house, as they can with a freehold home. When a vacant land condo complex is complete, it looks pretty much like a regular subdivision.
Because homeowners are responsible for their own property maintenance, the fees associated with vacant land condos tend to be lower than with other condo types, and tend to stay fixed for longer periods of time. Under this arrangement, nominal monthly fees support things like street maintenance and neighbourhood upkeep.
A POTL (Parcel of Tied Land) is an ownership style typically found in townhome-style complexes.A POTL unit includes a townhouse and the dirt directly below it, but often not a blade of grass beyond that. The yard is a common element of the condo corporation.
In a POTL, each unit is permanently “tied” to an interest in the amenities that the condo corporation manages (such as parking lots, access roads, sidewalks, parks and playgrounds). Because of its location within the complex, the unit is inseparable from its share of the common elements. You can’t buy or sell one without the other, and both are assumed at the same time.
PRO TIP: When shopping for a home, it’s worth keeping an open mind about different ownership arrangements. Vacant land condominiums, POTLs and other ownership styles may offer more affordable options than you’ll find in comparable freehold homes. #AskDavid #Advice