Parcel of Tied Land (POTL)공용 부분 콘도 타운하우스

What is it?

POTL stands for Parcel of Tied Land. The house and its lot are yours outright, in freehold. "Tied" to that lot is a share (a common interest) in a condominium corporation that owns the development’s shared parts.

This corporation is unlike a normal condo. It has no units, only common elements, so it is called a common elements condominium corporation. The common elements are usually the private road inside the development, visitor parking, mailboxes, landscaping, street lights and drainage, and sometimes a playground or park.

The Condominium Authority of Ontario (CAO) guide describes a POTL as property tied to a shared property interest in a common elements condo corporation, and says buying a POTL means buying a share in a common elements condo. It is a common set-up in newer GTA townhouse developments (a common practice).

Freehold vs POTL vs condo townhouse

A listing may say only "Freehold" and still have a POTL fee. Check the monthly cost line and whether a status certificate exists.

What the law says

• Part X of the Condominium Act, 1998 governs common elements condominium corporations. To register one, every owner of a common interest must separately own the freehold in a parcel of land. That parcel must be under the Land Titles system or, as an exception, have a certificate of title (a document confirming who owns the land) registered under the Certification of Titles Act, which has since been repealed (s. 139 (1)).
• On registration, each owner’s common interest attaches to that owner’s parcel (s. 139 (2)). The regulation (O. Reg. 48/01) defines a parcel with a common interest attached as a "parcel of tied land".
• When the parcel is sold or a mortgage is enforced, the common interest is not severed; it stays attached to the land (s. 139 (4)). It cannot be sold or given up separately.
• A parcel of tied land cannot be divided into two or more parcels unless an amendment to the declaration is registered (O. Reg. 48/01, s. 42 (3)).
• The rest of the Act (Parts I to IX, XI and XIV) applies with "unit" read as "common interest" (s. 138 (4)). That is why POTLs have a board, owners’ meetings, a budget, a reserve fund and status certificates.
• Section 50 of the Planning Act (subdivision control) does not apply to dealings with common interests (s. 142).

The monthly fee and the lien

A POTL owner pays the corporation’s common expenses in proportion to their common interest. The declaration sets each parcel’s share as a percentage. The expenses cover snow clearing and repair of the private road, landscaping, street-light electricity, insurance, the management company and contributions to the reserve fund.

Property tax on the common elements is included. Section 15 (4) of the Condominium Act treats the common elements of a common elements condominium as one parcel for tax purposes and makes that tax part of the corporation’s common expenses. The tax on your own home is billed to you separately.

If you do not pay, the corporation has a lien against your parcel (s. 139 (5)). It is registered like a lien on a condo unit and can ultimately be enforced by selling the land. Fees differ from one development to the next, so do not rely on a "typical" amount; check the listing and the status certificate.

The status certificate and new-build disclosure

The status certificate under section 76 of the Condominium Act applies to POTLs. The buyer asks the corporation for it and reviews, with a lawyer, the current fee and any arrears, the budget, the reserve fund balance and study, lawsuits, planned special assessments, and the declaration and rules. Making the offer conditional on reviewing the status certificate is the usual practice.

When you buy a new POTL from the developer, you receive a disclosure statement. Section 143 of the Act requires it to state that the common interest attaches to your parcel and cannot be severed on a sale or the enforcement of a mortgage. The Act’s 10-day cooling-off period (s. 73) also applies, with "unit" read as "common interest".

Mortgage, tax and insurance work like freehold

• Mortgage: it is a mortgage on your land and house. The common interest is attached to the land, so it is part of the security. Lenders normally count the POTL fee in your monthly obligations when they assess affordability (a common practice).
• Property tax: your home is assessed and billed in your name. The tax on the common elements is inside the fee.
• Home insurance: you insure the house yourself, as with any freehold. In the Act’s insurance sections (ss. 99 to 105), the references to units do not apply to a common elements condominium (s. 144 (3)). The corporation repairs and maintains the common elements (s. 144 (2)) and insures them (s. 99 (1)).
• Repairs: roof, walls, windows and yard are yours. The private road, visitor parking and common landscaping belong to the corporation. The declaration and description say exactly what is common.

Example

What to watch out for

• Do not rely on the word "freehold" alone. Find out whether there is a POTL fee, how much it is and what it covers.
• Always get the status certificate. A thin reserve fund or a lawsuit can lead to a special assessment later.
• The city does not plow or repair a private road. Check that the corporation’s budget can carry that work.
• The declaration’s rules (parking, exterior, garbage, pets) can be stricter than for plain freehold. Check what disputes the Condominium Authority Tribunal (CAT) handles.
• Unpaid fees become a lien on your land and must be settled when you sell.
• The common interest cannot be sold apart from the house; it transfers automatically with the lot. Have your lawyer confirm the contract covers the POTL fee and the status certificate.