This article is the last in our 3-part series on Converting your commercial property to a condominium.

Part 1 of this series considered the benefits of such conversions; Part 2 of this series took a look at their potential tax consequences; and this part provides a brief overview of the condominium conversion/creation process.

Creating a condominium can seem to be a daunting task – even when the project involves converting an existing building, rather than constructing a new one – but, like anything, it is rendered simpler when considered in its component parts. The task is also likely to be substantially simplified when the existing building is (a) non-residential, and (b) not proposed to be altered in any significant way.

Step 1: Conceptualization and pre-consultation

The first step in condominium creation, is conceptualization. You will need to consider what type of condominium it should be (there are several – standard, phased, vacant land, common elements, and leasehold – each of which is more suitable for different types of property and uses) and how it will operate. Then, when you have a reasonably clear idea about what you might like to do, the next step is to talk about it with the municipality that has to approve it.

All municipalities expect proposed condominium developers (including owners simply converting their existing lands to condominium) to attend a “pre-consultation” meeting with its planners. They will give you insight into what barriers you might face and what improvements they think your property might need in order to get their approval. There’s a good chance – in the case of a simple conversion project that involves no proposed changes of use or occupancy, and especially without proposed residential uses – that the municipality will make no significant demands. However, this really depends on the actual situation and conditions of the property.

Step 2: Application or exemption

With your pre-consultation done, you are ready to engage your surveyor (or planner or other qualified professional) to prepare a draft condominium plan to submit with your formal application to the municipality for condominium approval.

The draft plan is a graphic depiction of the property showing proposed unit and common element locations and various other fundamental features and information. Once it is ready, you will provide the requisite number of copies of the plan, along with the application form and fee, to the municipality, which they will then circulate internally and to other relevant agencies for review and comment.

This process is comparable to what is done for a regular plan of subdivision under the provisions of Ontario’s Planning Act. However, the Condominium Act, 1998 (Ontario), grants municipalities the option of applying a modified – usually simplified – “exemption” process. Sometimes the fee for the exemption process is less than for a regular application, but at the very least it can help make the process quicker and less complicated. This is something to ask about at the pre-consultation meeting, and should be a reasonable and appropriate option for the municipality to consider for this kind of conversion.

Step 3: Preparation of constating documents

While the application for condominium approval is in process, it is the appropriate time to engage your surveyor and legal counsel in the preparation of essential condominium documents.

A condominium is governed by a hierarchy of documentation, which begins with the “declaration” and “description,” the two documents that are registered at the Land Titles Office to actually create the condominium. The description is the set of survey plans that show the perimeter of the property and its internal divisions into units and common elements. The declaration is the “constitution” of the condominium corporation – the corporate entity that comes into existence upon registration for the purpose of managing the condominium lands. It sets out the basic rules of ownership, operation, and occupancy of the property.

Other documents, such as by-laws, rules, and resolutions, will also be needed to ensure the condominium operates in the manner you desire. And there will be additional requirements if and when you decide to sell any of the units; but these need not be considered if your intention is to retain the property immediately after conversion. Your legal counsel will help you determine, and should help to draft, whatever is needed.

Step 3.1: Land Titles (if needed)

Another step that might be required is an application to upgrade the status of your title to the property at the Land Titles Office.

Previously, the records of land ownership in Ontario were all kept on paper. While that might seem to be ancient history today, it wasn’t all that long ago that the process started to convert the paper records into digital form. Records that have undergone this process are labelled as having “Land Titles Conversion Qualified” status, meaning that although records were scanned or transcribed into digital form, their accuracy in certain respects has not been certified. That process is left up to the property owners to accomplish, but is also required of them when and if they choose, amongst other things, to convert their land to condominium.

Your lawyer can help you determine if this needs to be done. If it does, the process will involve both your lawyer and your surveyor, who will prepare a new survey of the property, a title search of all adjacent lands, and communicate with all neighbouring owners and other interested parties to help ensure no one has valid objections to the description (especially the boundaries) of the land you believe you own. This process can take anywhere from three months or more and therefore, if needed, should be done at the same time as other steps in the condominium conversion process.

Step 4: Final approval

When the municipality completes its review of your application, it may issue “draft plan approval” along with a set of conditions to be satisfied in order to obtain its “final approval,” which is needed in order to register the declaration and description at the applicable Land Titles Office. 

If your goal is simply to convert your commercial or industrial property into a commercial or industrial condominium, with no substantial changes to the configuration or conditions of the property or its uses, such conditions should be minimal; but if the municipality has identified issues of concern, it will require you to address those before moving forward with registration. By this stage, however, there should be no surprises; you should have gotten a head’s up about whether there might be any potentially significant conditions through the pre-consultation process.

It is also at this stage that you would submit your draft declaration and description to the Land Titles Office for review, to ensure they are in proper form to be registered.

Step 5: Registration & organization

With conditions cleared, final approval obtained, and the Land Titles Office’s confirmation that your declaration and description are alright, you will be ready to register them, which accomplishes your condominium conversion. Once registered, the next step is to organize the condominium formally – choosing its first directors and officers (typically yourself and key partners or employees), appointing an auditor, opening its bank accounts, and doing all the other things that allow your condominium to comply with its legislation and provide the benefits you are seeking, whether or not you intend to sell or transfer any of the units immediately.

Our team at Miller Thomson LLP  is capable of assisting you at every step of the condominium conversion process and beyond, to help ensure you achieve your goals as efficiently and effectively as possible.