Condominium

Three current meanings are related. Firstly, and most precisely, it denotes the title system and shared ownership relationship that exists among unit owners of a master lot that has been divided, under a condominium statute, into exclusive-use units and supporting common property. The whole property is described as being held “in condominium”. Less formally, the word identifies a particular project, such as the “Avalon Condominium.” Informally there is the popular “my condominium”, denoting an owner’s unit and share in the common property.

Condominium Property Act

 

The name of the Alberta statute that articulates, directs, and regulates condominium ownership. Since provinces have jurisdiction over land titles, each jurisdiction has its own condominium legislation. Fundamental concepts are essentially identical. However, from one province to the next, administrative technicalities may vary significantly.

Condominium Plan

 

Every condominium community has a plan, registered at a land titles office, that provides unambiguous definition of the perimeter of the master lot, the location of buildings (if any), unit boundaries, and the unit-factor distribution. The document replaces the original single title with unit titles.

Condominium Corporation

When a plan is deposited with a land titles office, an administrative body is automatically created. Membership in the condominium corporation is made up of the owners of the individual units. Its purpose is the management of the affairs of the condominium in the best interests of all owners.

By-Laws

 

A set of rules and procedures for the administration of the condominium corporation and the management and conservation of the common property. An initial set is provided by statute. However, conscientious developers will provide an appropriate site-specific set. Considered a contract between unit-owners, by-laws may be amended by a special (75%) majority.

Board of Directors

 

In Alberta, a corporation’s executive is called a Board of Directors. The Act’s initial Appendix 1 by-laws, although replaceable, stipulate a board of no fewer than three, except where there are not more than two owners, and not more than seven individuals.

Officers

 

From its members, the Board elects an executive C usually a President, a Vice-President, a Secretary and a Treasurer. The President chairs meetings and often has a casting vote. The Vice-President performs the President’s duties in his or her absence. The Secretary ensures minutes of proceedings are kept; and the Treasurer, that proper financial records are maintained.

Condominium Unit

 

Units are those parts of a condominium master lot which are designated for the private, exclusive use of individual owners. These “volumetric spaces”, whether structure-defined compartments of air (as in the case of apartments and traditional townhouses), or columns of air (as in bare-land projects), are defined by boundaries shown on the condominium plan.

Common Property

 

Every part of a condominium plan that is not a unit is common property. The condominium common property supports and services the individual units, and its ownership is proportionately distributed among the unit owners in accordance with their unit factors.

Tenancy in Common

 

Condominium unit-owners collectively co-own the common property as tenants in common. The arrangement is a long established, business-like system for administering undivided interests. In the absence of a written co-ownership agreement, common law provides for the accounting, allocation, and collection of operating expenses, and for the reimbursement of expenditures that result in capital enhancement. With condominium, the plan and by-laws (and the declaration in provinces which use this alternate document) are considered a contract between individual unit owners and the condominium corporation.

Exclusive Use

 

Although forming part of the common property, patios, balconies, parking, storage and other spaces are usually designated as exclusive-use areas for residents of a particular unit only. Most by-laws provide the board with authority to manage such assignment, as it may from time to time consider appropriate or optimal. Any presumed or represented tenure, permanent or long-term, should be verified and documented.

Unit Factor

“Unit Factor” is the term used in the Alberta Condominium Property Act to define each unit owner’s tenancy-in-common share in the common property. Unlike other jurisdictions, where a separate factor regulates distribution of operating costs, the unit factor also determines the proportionate contribution obligation (condo fees).

 

Contributions (Condo Fees)

 

Condominium owners contribute to a fund for payment of common property costs via assessments (whether normal operating, reserve, or special) levied against their units. “Contributions” is the proper term, but “condo fee” has acquired colloquial, although incorrect, currency.

Estoppel Certificate

 

In the context of condominium, it’s a certificate issued by a condominium corporation stating the up-to-date status of a particular unit’s contribution account. If the corporation certifies that there are no arrears, it is “estopped” from claiming otherwise against a new owner.

 

Apartments & Townhouses

 

Although any type of multi-user land (and structures it may contain) can be condominiumized, apartments and townhouses are the common residential applications. Often, and in British Columbia in particular, marketing literature implies that only apartments are condominiums. A townhouse project may or may not be registered under the Condominium Property Act. If it is, units are held in condominium just like their apartment counterparts.

Bare Land Condominium

 

In traditional condominium, both the master lot and the structural envelope of buildings are common property. The private unit is a compartment of air-space within that envelope. It is possible, indeed prevalent now in townhouse or villa projects, to condominiumize the land only. Within the master lot, the unit is a column of air similar to a traditional subdivision. The private structure that may or may not be constructed within the unit’s boundaries has no common property component.

Freehold & Leasehold

 

All land titles, including condominium, fall under these two categories. It’s not uncommon, however, to encounter the misleading claim that “this isn’t condominium, this is freehold” (or fee simple, which is a sub-category of freehold). The only precise way to distinguish between traditional titles and condominium is to refer to the former as non-condominium.

 

Disclosure Documents

 

Developers of new and conversion condominium are required to provide prospective purchasers with extensive documentation regarding investment details and due-diligence estimates of operating costs. The Condominium Property Act legislates a 10-day recission period for review and acceptance of these documents. Member boards of the Alberta Real Estate Association follow similar guidelines for resale contracts.

 

Rescission

 

Rescission is the right to cancel a contract under certain conditions. Every developer is required to enclose the following notice in red ink (with proposed revisions, to be changed to bold face, upper case and larger print) on the first page of the purchase agreement:

The purchaser may, without incurring any liability for doing so, rescind this agreement within 10 days of its execution by the parties to it unless all of the documents required to be delivered to the purchaser under section 9 of the Condominium Property Act have been delivered to the purchaser not less than 10 days prior to the execution of this agreement by the parties to it.

Annual General Meetings (AGM)

 

Once a year, within 15 months of the last, a condominium board is required to convene an Annual General Meeting of unit owners. At the meeting, the retiring board provides owners with operational and financial reports for the year past. Owners then elect a new board, and deal with any unfinished and new business, including (if required) appointment of auditors.

 

Extraordinary General Meetings

 

Anything other than the Annual General Meeting is called an Extraordinary General Meeting. By-laws usually permit the board to call, whenever it sees fit, or give a certain proportion of owners power to requisition, within procedural guidelines, an Extraordinary General Meeting. Usually, the purpose is to deal with an issue that requires urgent attention.

 

Proxy

 

Written authorization given by a unit owner to another so that person can act for the owner and exercise the unit’s voting share at a general meeting.

 

Annual Budget

 

Although not legislated, conscientious development of an annual budget is an important duty (normally required by by-law) of a condominium board. It’s the basis upon which contributions are levied and funds collected for the control, maintenance, and repair of the common property and the administration of the condominium corporation.

 

Reserve Fund

 

Often referred to as the “replacement” reserve fund, and usually held in secure, fairly liquid investments, it’s a fund of money set aside to provide for the repair and replacement of major parts of the common property. It is not intended to be used to cover regular or annually recurring maintenance.

Special Assessment

If sizeable repair or replacement expenditures are urgently required, and sufficient funds are not available in the reserve fund, the condominium board has little choice but to levy a special assessment. As would be the case with traditional houses, unit owners are required to come up with the cash necessary to rectify the problem.

Caveat

 

If contributions levied, whether regular or special assessments, are not paid by an owner, the condominium corporation may file a caveat against the title to the unit. The caveat (from the Latin, let him beware) is notice of the claim to anyone dealing in the unit. The charge gives the same foreclosure enforcement rights as a mortgage.