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July 01, 2013

The bare truth

Just what is a bare land condo?

Karen Durrie

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There is a lot of confusion over just what constitutes a bare land condominium.

Put simply — with a bare land condominium, only the land is condominiumized.

“The best way to describe it is to compare it to a traditional condo,” says Rick Murti, owner and broker for Edmonton-based Pinnacle Realty and Management, who is also a board member on the Association of Condominium Managers of Alberta.

“A traditional one is three-dimensional,” he says, stating the condo incorporates the common elements shared among unit owners, and this includes the master lot, walls and roof as common property.

“A bare land condo is like an overhead helicopter view. It’s two-dimensional. I don’t have to walk through anything. The dimensions are laid out by land titles. Anything that falls within those boundaries is considered the owner’s responsibility.”

And even if the bare land condo includes joined units that share roofs and walls, there is no common element to them. Owners must co-ordinate with one another on any concerns or needed repairs.

What you are purchasing when buying a bare land condo is the land and anything built upon it, and it is your responsibility to repair and maintain it. Sometimes, exterior repairs and maintenance of bare land units are transferred to the condo corporation via registered bylaws.

According to Service Alberta, a bare land unit is designated within a land parcel and defined by survey markers. Parts of the land parcel not comprised in a unit are common property, which is held by owners of all the units.

There are numerous bare land condominium communities in and around Calgary, including Tanglewood Estates, The Lake at Heritage Pointe, Okotoks Air Ranch, Elmont Green, and Lott Creek Grove.

Despite a common misconception that a condominium must be an attached townhome or apartment, the term “condominium” does not mean a specific type of structure, but a form of ownership referring both to the private residence and any common property for which neighbours share responsibility.

Condominiums can be townhomes, apartments, villas, single-family homes, and even luxury estate homes.

Luxury homes in the one million-plus category are what you’ll find at Lott Creek Grove, which is a bare land condo community nestled within Elbow Springs Golf Course.

Executive homes placed on large lots in the area conform to size and exterior finish guidelines in order protect the community’s appeal, says Anna Zajac, west Calgary sales manager for Lifestyle Homes Inc., Lott Creek Grove’s developer.

“The designation of bare land condo will assure your common areas of greens, path connectors will be taken care of,” Zajac says.

There are several advantages to buying a bare land condo, Murti says.

The condo fees are often lower, because there are fewer common elements involved, but there is still a condo board to protect owners’ interests.

“The misconception is you have the freedom to do whatever you want. So if you wanted to change the siding to purple, you could. But no — the corporation has to protect their interest, and it would still require board approval,” Murti says.

Another advantage to bare land condos is that units are an attractive prospect for buyers because of lower condo fees.

Developers can build sooner, because they can hand over titles right away and build as they have funds. This is unlike a traditional condo, where they would have to wait until a development is near completion before being able to sell units.

Bare land condos have been a hot topic in real estate news recently following an October 2012 court decision that impacted bare land condos.

A court ruling determined bare land condo corporations did not have authority to collect money or use reserve funds from owners for managed property repair and maintenance expenses, such as roof repairs or window replacements.

Bare land condo owners then called for changes to the Condominium Property Act to prevent sudden large special-assessment fees levied against them for managed property.

In May, an amendment to the Act was made to clarify that bare land condo corporations could collect fees and use reserve funds if their bylaws were written to allow it.

The Calgary Real Estate Board applauded the amendment, stating the earlier decision had created a great deal of uncertainty for bare land condo owners.

“The amendment lifts the cloud of uncertainty and means homebuyers can enter into purchase agreements with confidence, and that the maintenance fees can be collected and used as they’re intended,” said Becky Walters, president of CREB’s board of directors.

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