Broker's Best Practices: A Parcel of Tied Land (POTL)
Selling a property that features a Parcel of Tied Land (POTL) can impact a real estate transaction for the buyer, the seller and the REALTORS® involved. Therefore, it is crucial to recognize a POTL as a component of real estate.
If you come across a property with a POTL in your next real estate transaction as a TREB Member, whether you are representing a seller or a buyer, you must familiarize and engage in best practices by:
- Informing your prospective buyer about POTLs and what they entail;
- Using OREA Form 111; and
- Disclosing the POTL and the monthly fee on TREB's MLSâ System.
Read on to learn what a POTL is, how you can retrieve information about a POTL to share with your clients and also how to reflect a POTL on TREB's MLSâ System.
WHAT IS A PARCEL OF TIED LAND (POTL)?
A Parcel of Tied Land (POTL) is a freehold property with a common elements condominium that is registered under the Condominium Act.
Examples of features that could be included in a common elements condominium are:
- Parking areas
- Community centres
An example of a POTL is a single-family detached dwelling with a roadway (common element).
WHAT IS THE DIFFERENCE BETWEEN A STANDARD CONDOMINIUM CORPORATION AND A COMMON ELEMENTS CONDOMINIUM CORPORATION?
If your client wishes to purchase a unit in a standard condominium corporation, they will be required to pay a common element fee for the maintenance of hallways, elevators, etc.
Whereas, a common elements condominium corporation consists of common elements like roads or parks that are considered a parcel of tied land permanently attached to the property.
This type of corporation requires owners to fund their maintenance and repair of these common elements through monthly POTL fees.
HOW DO YOU KNOW IF THERE IS A POTL ATTACHED TO THE PROPERTY?
You can refer to the legal description easily through Public Records and discover if a POTL is attached to the property.
The legal description will identify the common element and the Condominium Corporation Number.
See below to familiarize yourself with how a legal description that contains a POTL will appear:
Part of Lot 12, Plan 69, T/W an undivided common interest in Rainy River, Common Elements Condominium Corporation No. 1970.
WHY SHOULD YOU OBTAIN A STATUS CERTIFICATE FOR YOUR CLIENTS?
A Status Certificate should also be obtained for your prospective buyers.
The Status Certificate will provide critical information surrounding the POTL, including the common element fee that the homeowner will be required to abide by.
This also means each POTL is unique and the monthly fee can vary.
TREB Members can access Status Certificates from any one of three property management service providers through the Condo Corner on Stratus, or by clicking here.
HOW CAN A POTL AFFECT YOUR CLIENT?
As a Salesperson, you must inform your clients of their responsibility for sharing the expenses related to the operation and maintenance of common elements.
You must also disclose that the property cannot be sold separately from the common element as described in the Status Certificate.
WHAT FORM SHOULD YOU USE?
As a Salesperson, you must use OREA Form 111 Agreement of Purchase and Sale – POTL, if there is a POTL attached to the property.
OREA Form 111 requires information about the POTL, including the legal name of the Condominium Corporation and the monthly common element fee as described in Clause No. 28.
For more a more comprehensive breakdown of Clause No. 28 in OREA Form 111, click here.
You can also easily access pre-programmed OREA and TREB Standard Forms, including OREA Form 111, through the platform Instanet® & Authentisign® that is available to all TREB Members.
WHERE SHOULD THE POTL BE REFLECTED IN YOUR LISTING?
If you are a Listing Salesperson and have a listing with a POTL, you must include the monthly POTL fee in the mandatory "POTL MONTHLY FEES*" field on the MLSâ Data Information Form.
The common element and monthly fee must also be referenced in the Client Remarks, e.g., "Condo Corp No 1970 roadway at $95.00 per month."
The Client Remarks field is viewable by consumers who visit REALTOR.ca, so mentioning the condominium component here ensures the consumer will be aware of the common element.
If the property you are listing has a POTL and you do not fill in the mandatory POTL monthly fee field, your Listing Brokerage may be subject to Professional Standards for review.
To engage in best practices, you may also find it helpful to review the below MLS® Rule:
The Listing Brokerage is responsible for the accuracy of all information submitted by the Listing Brokerage to TREB's MLS® System. TREB is not obligated to or responsible for reviewing the accuracy or propriety of any MLS® Data Information Form, MLS® Listing Agreement or Document Attachments. It is the Listing Brokerage's responsibility to verify the accuracy of the photograph, information and documentation and to correct any inaccuracy or notify TREB of any inaccuracy immediately of same as may be necessary in the circumstances.
Lastly, to be fair to all consumers (Buyers and Sellers), a property with a POTL should be advertised as detached with a condominium component.