Types of Condominiums: Part 3 – Phased Condominiums

This is part three of a five-part series on the types of condominiums authorized by the Condominium Act, 1998 (the “Act”). In the last post we covered standard condominiums. In this post, we describe phased condominiums.

Phased Condominiums

A phased condominium is created in the same way as other condominiums – with the registration of its declaration and description. However, instead of creating separate condominiums, the original condominium is expanded through amendments to the declaration and description plans, with each new registration constituting a phase as new units are constructed and added in each phase.

This type of project is attractive to builders as they can sell the units in one phase and use the proceeds to construct the next phase, reducing the amount of financing they require to construct the entire condominium. 

Key Features & Differences

Currently, the Act only allows standard condominiums to be phased.  As such, phased condominiums are standard condominiums for the purposes of the Act.  That said, there are a few notable differences (mainly in the relationship between the declarant and the condominium or unit owners):

• Phase Disclosure: In addition to the ordinary information that must be disclosed by the declarant to potential purchasers, the declarant must disclose information about the phases, such as whether the declarant intends to create phases after the phase in which the proposed unit is contained, and the projected year of registration for each phase that is intended to be registered after the phase containing the proposed unit.
• Phase Registration: While the developer does not require the consent of the owners to register an amendment creating a phase, the developer must give the condominium notice of its intention to register the phase. This gives the condominium an opportunity to review the proposed amendments and object (via court) to any material and detrimental changes.
• Phased Turnover:  The developer must turn over additional documents related to the phase which have not previously been turned over (i.e. new agreements or warranties for the property contained in the phase).
• Phased First Year Budget Deficit: Like with standard condominiums, the developer is responsible for a first-year budget deficit under s.75 of the Act. The developer is also responsible for the deficit for each subsequent phase, but only for the portion related to the phase.
• Updating existing records: The condominium must update some of its records or create new ones upon registration of each phase. For example, the condominium must have a performance audit completed for the phase if it contains residential units. A reserve fund study must be conducted for the lands in the phase.

Stay tuned for the last two posts in our series where we discuss common elements and vacant land condominiums.