Freehold, condo or common elements: which townhouse is it?

Ontario has three kinds of townhouse. Only the true freehold has no condo corporation. A status certificate costs up to $100 and must arrive in 10 days.

Three townhouses on the same street can be three different things in law. One is a house on its own lot with nothing attached to it. One is a condominium that happens to have its own front door at ground level. The third looks like the first and bills you like the second. Which one you are buying decides what you pay every month, who repairs the roof, and what your lawyer has to read before closing.

What are the three kinds of townhouse?

A true freehold townhouse, a condominium townhouse, and a freehold house tied to a common elements condominium corporation.

The Condominium Authority of Ontario divides condominium corporations into two main categories, freehold and leasehold, and lists four types of freehold corporation: standard, phased, vacant land and common elements. Two of those four are what townhouse buyers in the GTA actually run into.

A true freehold townhouse is not a condominium at all. You own the lot and the building on it. There is no corporation, no monthly common expenses, no board and no reserve fund. Your roof, your walls, your insurance, your snow.

A condominium townhouse is usually a standard condominium corporation, which the Authority describes as one that "has individual units and common elements which often include areas such as a foyer, exterior walls, and amenities". You own your unit, you own a share of everything else, and you pay common expenses every month.

A common elements condominium townhouse is the one people misread. In the Authority's words: "There are no units in this type of condo corporation, only common elements which are shared by owners of parcels of tied land (POTL) that are legally attached to the common elements."

Ontario's land registration bulletin on the Condominium Act, 1998 says the same thing from the registry side: "Common Elements Condominiums have no units. The owners of the common interest are owners of freehold parcels of land (parcels of tied land or POTL's) that are not part of the condominium property."

So the house is freehold and it is yours. The private road, the visitor parking, the lane, the park, whatever the declaration takes in, is the condominium.

There is a fourth arrangement you may meet in newer subdivisions. In a vacant land condominium corporation the units "are typically vacant lots at the time of purchase", the layout "may resemble a subdivision", and the common elements are "often things such as private roadways, private sewer systems". A house standing on one of those lots is a condominium unit even though nothing is attached to it.

Why does a freehold townhouse still have a monthly fee?

Because the fee follows the common interest rather than the house. The Authority puts it plainly: "Owners purchase a common interest in the common elements that is attached to their POTL."

Attached is the word that matters. You cannot decline the common interest, buy the house without it, or stop paying because you never park in the visitor spaces. It came with the parcel and it goes with the parcel when you sell.

The amount is usually well below what a tower charges, because the corporation is maintaining a road and a snow contract rather than an elevator, a pool and a concierge. It is still a fee, it still rises, and a lender counts it when working out what you can carry.

What happens if the common expenses are not paid?

The corporation can register a lien against the property and, if it runs the whole way, sell it. The Authority sets out the steps. A notice of lien comes first, and "if the owner doesn't pay within 10 days, the condo corporation can proceed" to register a certificate of lien. The corporation "can initiate the power of sale process 15 days following the registration of the certificate of lien", and the notice of sale sets a redemption date "45 days from the date of the notice's issuance", during which the owner can pay and the corporation cannot take any further enforcement step.

The clock runs against the corporation as well. A lien "automatically expires after three months unless the condo corporation registers a Certificate of Lien with the Land Registry Office".

This is why arrears are one of the things a status certificate has to disclose, and why your lawyer reads that page first.

Who repairs the roof?

Whoever the governing documents say, which is not the same answer on every street.

On a true freehold townhouse it is you, on every part of the building. Inside a condominium corporation the line between the unit and the common elements is drawn in the declaration, and owners must "repair and maintain their unit in accordance with the Act and governing documents". In a common elements corporation the house is not part of the condominium at all, so the building is yours and the shared land is the corporation's.

Read the declaration instead of assuming. Two townhouse corporations a block apart can divide the roof, the windows and the front step differently.

How do you tell which one you are buying?

Ask for the status certificate. If a condominium corporation of any kind is attached to the address, one exists and it will say so. The Authority: "Anyone can request a status certificate. Corporations can charge up to $100 including all applicable taxes to provide it and must provide them within 10 days." It carries the governing documents, the state of the reserve fund and whether the fees are in arrears. We have a separate guide on what to look for in a status certificate.

The second check is on title. In a common elements corporation the parcels of tied land are listed in Schedule D of the declaration, and since 1 March 2008 that schedule has had to carry a solicitor's statement that each parcel "will, upon the registration of the declaration and description, be capable of being individually conveyed, or otherwise dealt with, without contravening Section 50 of the Planning Act", under the province's bulletin on parcels of tied land.

A monthly fee in a listing is a hint rather than proof, and the word freehold in an advertisement is not a legal description.

What should you check before you sign?

• The monthly amount, and the written list of what it covers.
• Whether the road, the sewers and the street lighting are private or the municipality's.
• The reserve fund, and the date of the most recent study.
• Arrears, registered liens, and any special assessment already voted on.
• The rules on parking, pets and what you may change outside.
• Who insures the structure, and what your own policy still has to cover.

None of that takes long, and all of it is in writing before you are committed. Ontario publishes a plain summary of what owning a condo involves, and if you are weighing townhouses against each other our buying pages cover the rest of the process.