Buy land, Will Rogers once said, since they ain't making any more of the
That statement may have been true when the famous American humourist
said it around 1930, but it's not true any longer.
The fact is that although the amount of acreage is not increasing,
developers, lawyers and governments in the last 75 years have come up
with many innovative ideas to create new ways of owning land where none
Condominiums, for example, may consist of land and land deeds in the
sky. Although the concept dates to Roman times, the first condominium
law was not enacted in Ontario until 1967.
Since our Condominium Act was revamped in 2001, we now have common
elements condominiums, vacant land condominiums, leasehold condominiums
and phased condominiums.
All of these are new legal ways of holding title to registered lands
that could not be owned in this way prior to 2001.
In addition to simple ownership where a deeded owner holds land (on the
ground or in a condominium) forever and can dispose of it by sale or
bequest in a will, Ontarians can now purchase co-operative or
co-ownership apartments, timeshares or interval ownerships, land-lease
properties, life lease residences and now, fractional ownership.
I had heard of fractional ownerships before, but only in the context of
what were effectively joint ventures in luxury cars, yachts, cruise
ships, jets and stadium suites.
Recently, I had occasion to represent a group of clients who are
developing what will become a golf and residence club just west of
Collingwood in the Town of the Blue Mountains. The project is my first
close encounter with fractional ownership of real estate, a concept that
originated in the U.S. about 10 years ago.
I'm not a fan of the timeshare concept of resort ownership, in which
participants have a time-limited interest, are exposed to the financial
problems of the developer, and often experience difficulties in
financing or reselling their interests. (See the March 29, 2003, edition
of Title Page, at http://www.aaron.ca, for a case where the timeshare
lease holders lost everything when the promoter went bankrupt.)
Fractional ownership is a new breed of title-holding which is a mixture
of timeshare and condominium.
Each luxury chalet is a condominium unit, deeded in perpetuity to 10
separate owners, each of whom purchases a five-week fractional deed to
the property and a proportionate interest in the attached golf course,
tennis courts, clubhouse, pool and other common facilities. The five
weeks of ownership can be consecutive or spread throughout the year.
The golf course and other facilities are the common elements of the
condominium corporation, shared and paid for by the chalet unit owners.
Since the title is not a simple right of use like a timeshare, but is
held by registered deed, it is readily transferable like any other real
estate and can be financed with a conventional mortgage.
Most important, in a recreational community where the participating
owners have deeds to the land, they are the ones who control the
management company and not the other way around as in timeshares.
The owners' interest survives, as they do in a condominium project, even
if the developer steps out of the picture along the way. The permanence
and legal structure of fractional ownership offers many advantages over
the timeshare and land-lease concepts. In my view, it's a much better