Homebuyers tend to be divided between those who seek the convenience of condominium living and those who seek maximum control over their monthly expenses and run screaming from the lack of control over condominium fees, which they believe is inherent in condominium ownership. Recognizing this tendency, real estate listings abound with references to 'freehold' condominiums as entities embodying the best of both worlds.
Generally, the term "freehold condo" is used by builders and by the real estate industry to describe (usually) a townhome in which unit owners are assigned responsibility for maintaining and repairing their individual condominium units -- with these individual units being defined in such a way as to encompass the exterior surfaces of the home. The condominium corporation in such a 'freehold condo', however, is still assigned responsibility for maintaining the common elements, which usual encompass the roadway(s) and any grounds not caught within the boundaries of the individual condo units.
For those who want to be free from a certain amount of 'yard work' but do not wish to be made responsible (through the collection of monthly maintenance fees) for the costs of maintaining and repairing their neighbours' homes, a townhome condominium complex that assigns responsibility to individual homeowners for the maintenance and repair of the interior and exterior of their or own townhome may be an ideal purchase. In this light, such 'freehold condos' may suit those home buyers who are concerned with limiting future increases in condominium fees.
With a traditional condominium, condominium fees greatly increase over time largely because, in such a condominium, the condominium corporation has been assigned the task of maintaining and repairing, at the very least, the exterior of the buildings in the complex. Generally, real estate salespersons and builders are using the term 'freehold condominium' to refer to condos where individual unit owners are responsible for the regular repairs and maintenance to their units. As such, the underlying expectation is that the condominium corporation will not need to greatly increase condominium fees over time to take into account the cost of repairing the condominium buildings. Increases in condo fees may (and likely, will) still occur. However, it is assumed that these increases would not reflect the significant cost of maintaining and repairing deteriorating buildings. Any increases are more likely to reflect inflationary pressures/increased labour costs and rising costs associated with the ongoing need for regulatory compliance.
The problem with blindly accepting the industry usage of the term "freehold condo" is that, at law, there is no such creature. Owners of homes described as "freehold condos" within different condominium complexes may have differing obligations to repair and maintain the exterior of their homes. Similarly, different condominium complexes containing homes described as "freehold condos" may have significantly differing common elements, the maintenance and repair costs of which will be reflected in differing condominium fees.
The fact is that if a home is part of condominium complex it is a condominium. It is not a freehold home. This is so regardless of the fact that may 'feel like' a free hold because the individual unit owners may be assigned the responsibility of maintaining and repairing their individual homes. In Ontario, the Condominium Act, S.O. 1998, c. 19., imposes numerous requirements on condominium corporation relating to the management of condominium property and broadly governs the respective rights and obligations of the condominium corporation and individual unit owners. More importantly (from the perspective of individuals interested in the 'freehold' aspect of so-called "freehold condos"), the Condominium Act allows each condominium corporation considerable leeway to determine through its declarations what repair and maintenance expenses will be incurred by the condo corporation (and paid for through the collection of condo fees) and what repair and maintenance expenses will be incurred and paid for by individual unit owners. Even among condominiums described as "freehold condos", there can be significant variation with respect to the potential for condominium fees to increase.
Thus, rather than simply accepting a salesperson's description of the listed property as a 'freehold condo', the prospective purchaser of such a condominium should request from the vendor a copy of the condominium declarations and bylaws as well as a copy of the status certificate and provide the same to his or her lawyer for review. The condominium declarations, in particular, will help to identify whether the repair or maintenance of any parts of the condominium units within a condominium complex is the responsibility of the condo corporation regardless of the salesperson's description of the listed property as a 'freehold condo'. For example, it is not terribly unusual for the declarations to provide that the unit owners are responsible for maintaining and repairing the exterior of their townhomes with the exception of the roof. The logic behind such a provision is that in a townhome it is very difficult to repair only one's own section of roof without affecting one's neighbour's roof. While the logic of such a provision is sound, the existence of such a provision within the condo declarations certainly makes the state-of-repair of rooflines throughout the complex a relevant consideration to a potential purchaser.
D. Dean Obradovic
Civil Litigation
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