If you’re buying a house in the south part of Guelph, in particular in the Pineridge/ Westminster area, you may have been exposed to the term “POTL” or parcel of tied land. In fact, this type of sale should even be reported on a separate real estate Purchase and Sale Agreement called Form 111- POTL.

You shouldn’t be worried about a POTL sale as it’s usually not much different than a regular transaction, but there are a few things you should know. This blog will take you through the basics of a POTL.

What is a Parcel of Tied Land (POTL)?

A Parcel of Tied Land (POTL) refers to a property that is legally connected to a common element, such as a private road, shared amenities, or communal spaces. Your home would be considered to be a freehold home that has a fee related to the land, which is typically a nominal amount.

How Does POTL Work?

A Parcel of Tied Land (POTL) is typically part of a real estate development where certain aspects of the property are collectively owned. It’s almost like you’d want to consider it a hybrid between a detached home and a condominium corporation. Here are some key differences:

  1. Detached home: The owner holds a freehold (no fees) title for their specific home and lot
  2. Condominium Corporation: A condominium corporation manages the common elements, and all owners contribute to its maintenance. This typically includes all exterior elements as well as some of the exterior elements of the condo itself
  3. POTL: Owners are required to pay ongoing maintenance fees for the upkeep of common areas. These are significantly less than a condo fee because it only covers exterior land area (not the building itself)

Here are some examples of POTL in Real Estate

1. Gated Communities

Although really non existant in Guelph, any gated communities operate under a POTL structure. As a result, homeowners own their lots but must contribute to the maintenance of private roads and security features.

The closest would be the Village by the Arboretum, a 55+ retirement community in Guelph. Although the owner is responsible for the structure (house) themselves, the monthly fee paid is to cover costs of homeowner amenities. This includes the Village Centre, the community activities and more.

2. Townhouse Developments

Some townhouse complexes are built as POTLs, allowing owners to maintain control over their individual units while still benefiting from shared landscaping, parking, or recreational areas.

This would be the most common example in Guelph, but the POTL extends to more than just townhouses. It includes all home in the neighbourhood which includes townhouses, semi-detached homes and detached homes. Annual fees are typically in the range of $220 per year.

3. Private Roads

When a group of homes is located on a private road, each homeowner may own their property outright . However, they would be obligated to contribute to road maintenance under the POTL designation.

We owned a cottage that was on a private road. All homeowners paid a flat fee of $1000 per year to maintain the road, from development to snow removal. The board of owners manage and report the financials annually on how the $1000 per person is spent.

Advantages of POTL

1. Ownership and Control

Unlike traditional condominiums, a POTL allows owners to have freehold ownership of their land while still enjoying the benefits of shared amenities such as Guelph parks and trails.

2. Lower Condo Fees

Since POTL properties only share specific elements, the monthly maintenance fees are typically lower when you compare them to standard condominiums. As mentioned, they are roughly $220/yr in Guelph, compared to the average condo fee of $450 per month or more (some condos in Guelph have fees of over $1000 per MONTH)

3. Increased Property Value

Properties with well-maintained shared elements tend to hold their value better, as they offer amenities that enhance the community’s appeal. This is definitely true with the Pineridge/ Westminster neighbourhood, one of the best performing neighbourhoods in Guelph.

4. Community Living Benefits

POTL developments often provide exclusive access to well-maintained parks, trails, and recreational facilities, fostering a sense of community among residents. Preservation Park in Guelph is a protected area that benefits from the POTL.

Potential Drawbacks of POTL

1. Mandatory Fees

POTL owners pay maintenance fees, even if they don’t use all the shared elements. Although less than the price of a coffee per day, it’s still an expense that you need to budget for.

2. Restrictions on Property Use

Some POTL developments may impose restrictions on renovations, landscaping, or exterior modifications.

The legal structure of Parcel of Tied Land (POTL) can be more complex than standard freehold ownership. As a result, this requires buyers to carefully review agreements before purchasing.

Although there is more involvement in a POTL, it’s usually a fairly straightforward agreement that resembles a condominium purchase. As mentioned earlier, a potential buyer should always right an offer on POTL on form 111. However, we’ve seen many instances on form 100 (freehold property sale) or form 111 (condominium sale). This isn’t the correct way to do it, but it does happen.

4. Risk of Special Assessments

If the condominium corporation faces repair costs, it may require POTL owners to contribute additional funds through special assessments. To ensure that you fully understand the obligations of the condo corporation, you should always review the status certificate.

How to Determine if a Property is a POTL

Before purchasing a property, it’s important to determine whether it falls under the POTL category. Here are some key steps:

  1. Review the Property Deed: The deed will indicate whether the property is a Parcel of Tied Land (POTL).
  2. Check the Title Documents: A title search can confirm if the property is part of a Common Elements Condominium Corporation.
  3. Consult a Real Estate Lawyer: A legal expert can help interpret any POTL obligations tied to the property.
  4. Status Certificate: A status certificate will provide detailed financial and legal information.

Tips for Buying a POTL Property

  1. Understand the Fees – Ensure you know the ongoing maintenance fees and how they might increase over time.
  2. Check for Restrictions – Review any community guidelines to ensure they align with your lifestyle and property usage needs.
  3. Assess the Common Elements – Inspect shared areas to determine if they are well-maintained and worth the cost of ownership.
  4. Plan for Long-Term Costs – Consider potential special assessments and future maintenance expenses when budgeting for your home.
  5. Work with an Experienced Realtor – A real estate agent familiar with POTL properties can guide you through the purchase process.

Is POTL Right for You?

Whether or not a Parcel of Tied Land (POTL) is the right choice depends on a variety of factors. As an example, your lifestyle, financial situation, and preferences. If you value freehold ownership but want access to shared amenities, a POTL may be a great option. However, if you prefer complete independence from communal obligations, a traditional freehold property may better suit you.

Still have questions?

If you’re considering buying a Parcel of Tied Land (POTL) property, reach out to Beth and Ryan Waller! We can help you better understand a POTL.