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February 16, 2006

Condo Concepts - February 2006 Issue 52

The Wide Variety of Condo Formats Available

Douglas Gray

Residential condominiums can be found in either the metropolitan or the suburban setting.

Metropolitan location
In the metropolitan setting the most common formats are:
• a modern high-rise apartment building
• a three-to-five storey new mid-rise building
• a converted older building that formerly consisted of rental apartments
• a building where the street-level floor is owned jointly by the condominium corporation members (the unit owners) and which is rented out to retailers to help offset the common maintenance fees of the residential condominiums in the rest of the building
• same format as the previous example, except that the retail space is sold as condominiums.

Suburban location
Suburban condominiums are most often found in the form of:
• cluster housing consisting of multi-unit structures, using housing of two to four units apiece, each with its own private entranceway
• townhouse-type single-family homes distributed in rows garden apartments consisting of a group of apartment buildings surrounding a common green, frequently with each of the floors held by separate condominium owners
• a series of detached single-family homes in a subdivision format, all utilizing the same land and parking areas
• duplexes, triplexes, or four-plexes.
The suburban condominium format tends to make maximum use of the land while creating attractive views, private driveways, and common recreational facilities such as swimming pools, tennis courts, saunas, playground, etc.  The purpose of these separate developments — restaurants, shopping centres, recreational and entertainment facilities, and care facilities for older people — is to make the condominium community a very distinct and self-contained environment and community for many people

Recreational Condos
Recreational condominiums can take various forms, including mobile home parks where the “pad” with utility hookups is owned in fee simple by the individual owner, with a share in the common elements of the rest of the park. Alternatively, it could be in a leasehold format. Another option is to create bare land condominiums in rural, wilderness, or waterfront areas. In these examples an owner could build a cabin with fee simple ownership to the land underneath and a partial interest in the common elements. The common elements could include a marina, beach, farm, or forest. Common recreational facilities could include a playground or community centre, and assets could include boats or farm animals.

Resort condos
The development in resort areas is extensive and condominiums are frequently built on lakeshores, sea coasts, or island resorts, or in ski country. There are two main types of resort condominiums: those developed for warmer climates and those developed for winter climates.

The warmer-climate type is generally built around a common recreational facility that can be enjoyed throughout the year by the owners, one that includes such facilities as a seashore, lake, marina, or golf course. The buildings tend to range from high-rise apartments to cluster housing.

Winter resort areas tend to be built near popular ski resort developments. Many tend to provide recreational facilities for the summer season as well, such as golf courses, tennis courts, and swimming pools, so that it is a year-round resort. The buildings tend to be in the form of cluster housing, modular housing, attached townhouses, or bare land detached homes.

People who purchase a recreational or resort condominium tend to:
• Own it outright and use it throughout the year for lifestyle enjoyment
• Own it outright and rent it when not in use by using the condominium corporation or property management company as an agent, using a real estate agent, or renting it independently and directly.
• Own a portion of the condominium and us it for personal use and/or rentals, with the time available commensurate with the percentage equity ownership.

Commercial/industrial condos
Ownership of a commercial or an industrial condominium is similar in concept to the ownership of a residential one. There are various reasons why condominiums for commercial purposes are an attractive alternative to renting space, buying land with a building on it, or buying land and building on it. Some of the benefits include:
• Tax advantages for an owner-occupier of his or her own business premises including depreciation, expense deductions for mortgage interest, etc.
• Placing a limit on monthly costs by carefully regulating costs through the condominium corporation policies.
• Avoiding rent increases.
• Shared contribution of costs for features such as maintenance, security, common facilities, and advertising.
• Appreciation in value of the condominium over time.
• Right to participate in the decision-making relating to the condominium development.
• Opportunity to be assured of remaining in a unique location that is commercially attractive.
• Removal of the financial risk of owning a complete building.
• Providing an alternative if there is a lack of financial capability or desire to own the whole building.

Types of commercial/industrial condos
The three main types of commercial-use condominiums are office buildings, professional buildings, and industrial parks.

Office buildings
In Canada, commercial condos are a popular concept in many major cities and involve a cross-section of retail and service businesses operating through the condominium structure.

Professional buildings
A familiar form of office use is the dental or medical condominium, where each dentist or doctor owns a suite. The nature of a dental or medical office is often such that it does not expand in size as other businesses do. Another advantage for the professional is the possibility of sharing reception areas, central telephone answering, accounting areas, and expensive equipment. It is fairly common in this type of building to sell or lease the street-level condominiums to retail outlets such as pharmacies, laboratory or x-ray service groups, magazine stands, restaurants, etc. Lawyers also own offices in condominium buildings and take the same approach as dentists and doctors in terms of shared office space, reception area, library area, word processing, etc.

Industrial parks

Industrial parks established on a bare land condominium format are a popular development. They can be advantageous due to the fact that the business can have the individual unit for its industrial or manufacturing needs but can share in the common elements such as docks, loading areas, rail sidings, etc.   CL

Excerpted with modification, from 101 Streetsmart Condo Buying Tips for Canadians, by Douglas Gray, to be published by John Wiley & Sons in May, 2006. Copyright  2006 by Douglas Gray. All rights reserved. Any reproduction of this material without the author’s advance written consent is prohibited. The author assumes no responsibility whatsoever for any information provided above, as the purpose of the column is for general information only, and not intended to provide professional advice.

Douglas Gray, LL.B., is formerly a practicing lawyer in Vancouver, B.C. who morphed into a consultant, speaker, columnist, and author of 22 bestselling books, including the recently released Canadian bestseller, Making Money in Real Estate (The Canadian Guide to Profitable Investment in Residential Property), 2nd edition.  In his real estate legal practice, he has advised condo buyers and sellers, condo corporations, lenders, borrowers, investors and developers. He has also been a real estate investor for 35 years.
His website is: http://www.homebuyer.ca.

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