The Transfer of Locker & Parking Units

[This article speaks to parking units and locker units that form separate deeded units, as opposed to exclusive use common elements that form part of the condominium corporation.]

Our office often receives inquiries surrounding the transfer of parking units or locker units. It is not uncommon for the parties considering such transactions to be taken aback by what is involved and, regrettably, the resulting costs. They view the value and appearance of the parking spot or locker unit and fail to see the big deal. 

What cannot be forgotten is that the transfer of a locker or parking unit is a transfer of real property. Whenever real property is transferred, certain protocols must be addressed. Consider this:

1. An agreement in writing is necessary whenever real property is conveyed; 
2. Rule 2.04.01 of the Law Society of Upper Canada, known as “the Two-Lawyer Rule”, with very limited exception, does not allow a lawyer to represent both a vendor and purchaser in the transfer of real property;
3. Due diligence considerations – title search and Status Certificate. If one only considers physically parking in a different spot, he/she fails to recognize the responsibilities that come with owning real property. Ownership confirmation, together with verification surrounding the payment of common expenses, charge backs and property taxes, etcetera, should be considered;
4. Mortgage complications. When a dwelling unit is bought, together with a locker and parking unit, it is not uncommon for financing to be obtained. Typically, a mortgage is registered against all properties. When the locker is then being swapped for another, the mortgage registered against it must then be addressed;
5. Ownership restrictions. It is often the case that a condominium corporation’s Declaration restricts ownership of locker and parking units to the developer, an owner of a dwelling unit within the condominium and, in some cases, owners of dwelling units within neighbouring buildings. The condominium corporation’s documents need to be reviewed and an opinion sought to ensure that the transaction may proceed; and 
6. Taxes.  

Land Transfer Tax. Land transfer tax is payable on the consideration being provided for a property. In the case of a unit “swap”, a determination as to the value of the units should be taken into account for remittance purposes. 

Harmonized Sales Tax. When a parking or locker unit is transferred without a dwelling unit, the transaction no longer qualifies as an exempt transaction for HST purposes. Taxes are often neglected when parties consider costs surrounding these transactions and it is important to determine whether HST is included in or payable in addition to the purchase price... especially when one realizes that the total HST payable on a $15,000 parking unit is almost $2,000!

Property Tax. Particularly if the transfer is from the developer, it is often the case that the locker or parking unit has not yet been assessed for taxes. This does not mean that the unit is exempt from property tax, or that the municipality will not seek payment for the period prior to closing.

Transfers of parking and locker units take place all of the time, there is no magic to them nor insurmountable complications involved. There are, however, factors to be addressed that are often neglected in the initial consideration of such transactions and the costs involved.

Over the years, Elia Associates has developed a form of Agreement of Purchase and Sale for locker and parking unit transfers from condominium corporations that efficiently addresses the unique aspects of these transactions and has established a process that allows for achievement of economies of scale to help minimize costs when a condominium sells multiple units. Contact us for more information.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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