With rising property costs in Alberta and Saskatchewan, more consumers are turning to alternatives to traditional freehold titles. One alternative growing in popularity is bare land condominiums. Bare land condominiums can be an alternative way to get the living space and amenities you want while sharing some common costs with others, but it’s important that all parties involved in a potential transaction understand what’s included (and not) in a deal involving this type of ownership.
Understanding the difference is key
In conventional condominiums, residents own their unit and share the costs of maintaining the common property of the building and lot, it is built on. This is unlike bare land condominiums, which can but don’t typically involve a multi-family structure.
Bare land condominiums involve owning the lot and all improvements on it, such as the structure and landscaping while dividing the cost of owning and maintaining common property. This would usually include things like landscaping and snow removal. In most circumstances the bylaws in bare land condominiums are far less restrictive. Due to the unique nature, bare land condominium transactions require a Real Property Report (RPR).
Following due process
Misunderstandings can lead to significant legal issues, as demonstrated by one of REIX’s largest claim payouts to date. In this case, the buyer alleged that their lawyer informed them the property was a bare land condominium at their lawyer’s office on the day of close. This crucial detail, which the agent had failed to disclose earlier, prompted the buyer to refuse to close, causing the deal to collapse the day of closing.
The buyer’s agent copied the land description from the MLS sheet where it was incorrectly listed as a freehold property. Had the agent reviewed the Certificate of Title, they would have realized the property was not freehold but was actually a bare land condominium. Upon reviewing the evidence, the court recognized substantial differences between freehold properties and bare land condominiums, where owners must be members of the strata corporation and adhere to its bylaws and controls. The court ruled that the agent had misrepresented the property, allowing the buyers to rescind the transaction.
The bottom line: Transactions involving bare land condominiums differ from typical transactions. Bare land condominiums are NOT to be listed under single family residential for ‘better marketing exposure’. All REIX subscribers must follow the proper procedures and ensure all parties are fully informed of the precise nature of the property before writing a deal.