When looking to purchase Residential Real Estate, the two most common products available on the market are Freehold and Condominium. These two terms, ubiquitous in the Toronto Real Estate market, might seem to be the only two types of land interest there are in Ontario. However, in rare circumstances, one might encounter a freehold or condo property with a Parcel of Tied Land (POTL). POTLs, though infrequently used, are an extremely efficient way to manage a shared piece of land.
What is a Parcel of Tied Land?
A Parcel of Tied Land, or POTL, is a property which carries with it interest in a Common Elements Condominium. A POTL, once joined must be transferred or mortgaged with the property. Common examples of POTLs are:
- shared parking spaces,
- marinas,
- golf courses, or
- parks.
How does a Parcel of Tied Land Work?
In order to understand the Parcel of Tied Land, you first need to understand the idea of a Common Elements Condominium (CEC).
Common Elements Condominium
A Common elements condominium is a condominium registered under the Condominium Act, 1998. The difference between a CEC and a “standard” condominium is that the CEC has no individual units. Instead of purchasing a unit in the Condominium Corporation, you are purchasing a fraction of the corporation as a whole. These fractions are typically equal, but can vary in ownership percentage based on a variety of factors.
Other than this notable change, CECs function virtually identical to the traditional Condominium. The shareholder is responsible for monthly maintenance fees and, in return, the CEC grants use of the common elements. (which can be the park, tee-times at the golf course, or a slip in the local marina).
POTLs and Common Elements Condominiums
A Parcel of Tied Land is simply the means of ownership in a Common Elements Condominium. In order to own the share in the CEC, you must purchase a property with the POTL. The land transferred with the POTL can be freehold OR a condominium in and of itself. POTLs can be subject to easements, which dictate shared property use rights.
Just as in a condominium, a POTL carries with it the obligations of unit holders. The most prominent of these is the monthly Common Expenses Contribution. These are more commonly referred to as Condo Fees, Maintenance Fees, or POTL Fees.
POTL Fees
POTL fees (also called POTL maintenance fees or common expenses) vary widely depending on what the Common Elements Condominium (CEC) actually owns and how many owners share the cost. A golf course community will have significantly higher fees than a shared driveway, and a CEC with 500 members can split costs into much smaller fractions than one with only 5. By further example, private road fees depend heavily on road length and the number of owners sharing the cost. Marina fees vary by slip size and amenities provided.
What POTL Fees Typically Cover
Your POTL maintenance fees generally pay for:
- Ongoing maintenance (grading, resurfacing, repaving)
- Snow removal and winter maintenance
- Landscaping and grass cutting
- Insurance on the common elements
- Property taxes on the tied land itself
- Shared utilities, where applicable
How POTL Fees Are Calculated
CECs use several methods to divide costs among owners:
- Pro-rata by lot frontage or area: The most common method. Larger lots pay a proportionally higher share.
- Equal split: Each owner pays the same amount regardless of property size.
- By usage: Common for marinas, where fees may be based on slip size.
Fees are typically assessed by the CEC’s board or property manager and increase annually based on inflation and maintenance needs. Unlike condo fees, which are paid monthly, some POTLs bill quarterly or annually—confirm the payment schedule before you buy.
CEC’s VS Regular Condos
It is important to note that the qualifier of a Common Elements Condominium (CEC) is that the land described as condominium is common. While this might seem like an obvious prerequisite, it is the most common misconception when distinguishing between freehold and condominium properties.
The most common of these errs is with respect to Townhomes. Prior to the revisions of the Condominium Act in 1998, it was common for developers to build townhomes as freehold. Each townhome, though connected to the neighbours, was a freehold piece of property. Neighbours were responsible for their own maintenance & upkeep of the unit and its grounds. Where necessary, the developer would register easements when an obligation was due by both owners, for example with a party wall.
The rise in popularity of Condominium Townhomes was largely due to the desire for hands-off maintenance of property. With condo townhomes, dwellers could now simply pay a monthly fee and have all their property management and upkeep looked after. However, similar to the obligations of a condo apartment, owners had less freedom and individuality with their units when it came to renovation & design, facade changes or paint, or repair & replacement.
The Condominium townhome would carry with it the necessary common elements (usually shared drive or parking spaces) and through owner use agreements, effectively eliminate the need for a Common Elements Condominium or POTL.
Obligations of a POTL Holder
A common misconception about POTLs is that they hold no significance other than the right to use. Some believe that they are under no obligation to pay the monthly common expenses of the CEC. Unfortunately, this is not a case. In Ontario, Default of common expenses under the Common Elements Condominium occurs when one is unwilling or unable to pay the POTL Fee, and is treated same to that of a traditional condo. A lien can be registered against the freehold piece of property.
POTL Red Flags: What to Check Before Buying
Buying a POTL property requires the same scrutiny you’d give a condominium purchase PLUS your standard freehold title searches. The key document is the POTL status certificate, which your lawyer should order and review before you waive conditions.
Before You Buy a POTL Property
- Order the Status Certificate for the CEC (use OREA Form 111 for POTL transactions)
- Review the reserve fund. Is it adequately funded for upcoming repairs?
- Check for special assessments. Any pending or recently levied?
- Review fee increase history. Look at the past 3–5 years
- Clarify what’s included vs excluded. Know exactly what you’re paying for
Red Flags to Watch For
When reviewing the status certificate and CEC documents, be wary of:
- Underfunded reserve fund. This often leads to special assessments
- Large special assessment pending or recently paid. Indicates deferred maintenance catching up
- Fees increasing faster than inflation. Could signal poor financial management or aging infrastructure
- Visible neglect of common elements. Drive the private road, look at the amenities
- Management disputes or litigation. Check the CEC meeting minutes
- Unclear fee allocation method. You should understand exactly how your share is calculated
Questions to Ask Before Buying
- What’s the current annual fee, and when was the last increase?
- Have there been any special assessments in the past 5 years? Any planned?
- Who manages the CEC—a professional management company or volunteers?
- What major repairs or replacements are anticipated in the next 5–10 years?
The Bottom Line on POTL Due Diligence
Unlike a traditional condo, you might never set foot on the common elements (there’s no elevator to your freehold house). But that doesn’t exempt you from paying your share. If the CEC has deferred maintenance, those costs will eventually come due…and you’ll be legally obligated to pay. Improper upkeep can result in expensive assessments, and aging infrastructure can push annual fees higher than the amenity is worth.
Other Considerations about Parcels of Tied Land
Whilst POTLs can be an incredibly efficient way at managing a shared piece of adjacent property amongst owners, it can also carry with it some significant drawbacks. Unlike a traditional condo, owners could theoretically live in their units without ever using or interacting with the common elements. (For example there’s no elevator to get to the freehold unit). This however, is not a justifiable excuse for a unit owner refusing to pay their share. Improper maintenance or upkeep of a POTL could result in expensive assessments levied against the owners, which they would be legally obligated to pay. Increasing annual maintenance fees due to old equipment amortized far beyond its use could lead to upkeep costing more than its worth.
Have a question about how a POTL may affect you when buying or selling? Contact Us for your free consultation today.