Condo, Townhouse or House When You Downsize in Ontario

Ontario Downsizing is an information resource written by real estate agents on the operating team at eXp Realty. Nothing here is legal, tax or financial advice. Fees, rules and ownership structures vary building by building and development by development, so this page avoids dollar figures and tells you what to ask instead.

What changes when you move to a smaller home

Most people comparing these options are trying to change one or more of four things: the amount of maintenance, the amount of space, the stairs and the money tied up in the house. Each home type shifts those in a different direction, and each adds something new. A condo removes the snow shovel and adds a board, a budget and a set of rules. A bungalow removes the stairs and keeps the roof. Decide which of the four matters most to you before you tour anything, because it will settle many of the later arguments.

Think too about what the home needs to do in five or ten years, not only this year. Entrances without steps, a bathroom on the main floor and room for a caregiver or a visitor are easier to pick now than to retrofit. Our guide on aging in place or moving covers that question from the other side.

Condos for downsizers in Ontario

In a condominium you own your unit and share ownership of the common elements, such as hallways, the roof and the grounds, through a condominium corporation. Governance, fees and rules run through that corporation under the Condominium Act, 1998. The Condominium Authority of Ontario lists several condo types: standard, phased, vacant land and common elements condominiums.

What a condo gives you:

• Exterior and common-area maintenance handled by the corporation, funded from monthly common expenses.
• A reserve fund held for major repair and replacement of common elements.
• A lock-up-and-leave routine if you travel.

What it asks in return:

• Monthly fees that the board can raise, and special assessments if the reserve fund falls short. The Authority notes that a board can levy a special assessment through common expenses without owner approval.
• Rules on pets, smoking, short-term rentals and other matters, set out in the governing documents. Read them before you offer, not after.
• Less control over big decisions such as when to replace a roof or an elevator.

The condo purchase has its own paperwork, including a status certificate and a reserve fund study. Our guide to buying a condo in Ontario walks through both.

Freehold townhouses and POTL fees

A freehold townhouse sits between a condo and a detached house. You own the building and the land under it, usually with shared walls. Whether you owe a monthly fee depends on how the development is set up.

Some freehold townhouses have no corporation and no fee. Others are built on a parcel of tied land, often shortened to POTL. The Condominium Authority of Ontario describes a common elements condominium as one with no units, only common elements shared by the owners of tied parcels of land. In a POTL townhouse you own the house and lot as freehold, and the lot is tied to that corporation. The corporation looks after the shared pieces, which can include a private road, visitor parking or green space, and owners pay common element fees to fund it.

The trade-off is real in both directions. You usually get more say over your own interior, entrance and sometimes a small yard, and you carry your own roof, windows and exterior. A POTL fee is smaller in scope than a full condo fee, because it covers only the shared elements, but it still moves over time. This site has no confirmed figure for typical POTL fees, so do not rely on a number from a listing or a neighbour. Ask for the common element budget, the most recent financial statements, the governing documents and any reserve fund information in writing.

A POTL purchase also uses a different standard form from a regular freehold sale. An Ontario Real Estate Association bulletin names Form 111 as the Agreement of Purchase and Sale for a POTL or common elements condominium. Your lawyer will review whichever form applies.

Bungalows and single-level houses

A bungalow is a house, usually detached or semi-detached, with the main living space on one level. People moving from a two-storey home often look at them because they avoid a daily staircase, though many bungalows still have a basement with stairs. Check the floor plan rather than the label. A raised bungalow, for example, has a half-flight at the front door.

Owning a bungalow means you pay for everything on your own timetable. There is no monthly condo fee and no board, which suits owners who like control and have a way to handle repairs, such as a handyperson, family nearby or a maintenance routine. It also means a large repair arrives as a single bill. If you are downsizing partly to reduce upkeep, ask yourself honestly how much of the yard, the driveway and the exterior you still want to look after.

Older bungalows deserve the same inspection you would give any older house. See preparing an older home for sale for the kinds of issues that turn up, and read flood and storm insurance when downsizing before you settle on a lot, since a lower-lying property can change your coverage questions.

Life lease and land lease homes

These are not ownership in the usual sense, and they behave differently from the three options above.

A life lease gives you a right to occupy a unit, generally for as long as you hold it, rather than title to it. The Province of Ontario says no legislation specifically regulates life lease housing, so the contract does most of the work. Pricing models, resale fees and fee-increase limits vary by sponsor. A land lease community is different: you typically buy the home and rent the land under it, and the Residential Tenancies Act covers that arrangement.

Both are common in communities aimed at older adults, and both come with questions that a condo or a house does not. We cover the mechanics and a question list in life lease and land lease homes in Ontario. For examples of communities, browse 55+ communities.

Condo, townhouse, bungalow or life lease side by side

The table shows general patterns, not rules. Any individual building or development can differ, which is why the right-hand column matters most.

Money questions that apply to all of them

The price of the new home is one number. The others are what you keep from the sale of the old one, the taxes on the purchase and the carrying cost afterwards. The buyer pays land transfer tax in Ontario, and the seller does not. Toronto adds a Municipal Land Transfer Tax on top of the provincial one. Our guide on land transfer tax in Ontario gives the rates and examples, and estimating net proceeds shows how to work out what is left after the sale.

Sellers of a principal residence generally do not pay tax on the gain, but the rules have conditions. Read capital gains and selling your principal residence and confirm your own case with an accountant. You can also try the net proceeds calculator.

If you are buying a new-build home, Ontario and the federal government have housing rebates with limits and dates. Those depend on price and on whether you qualify, so ask the builder and your lawyer which apply to you. The Tarion warranty on new homes also differs between freehold and condo units, with different maximum coverage amounts.

How to decide between a condo, a townhouse and a house

A few questions tend to sort the options quickly.

• Do I want someone else to decide when the roof is replaced, or do I want to decide myself?
• Can I absorb a special assessment or a large repair bill without it changing my plans?
• How many stairs, from street to bed, am I willing to climb in ten years?
• Do I travel for months at a time, and who watches the home?
• Do I need space for a car, a workshop, a hobby or visitors?
• How do I feel about shared walls, shared rules and a board that I may or may not sit on?

Notice that none of these questions is about who you are. They are about how a home works. Your answers may point to different options at different stages, and that is normal.

Get the legal and structural details checked

Whichever type you choose, an Ontario real estate lawyer should review the agreement and the governing documents before you commit. In Ontario, a transfer of title generally involves one lawyer for the transferor and a different one for the transferee, with some exceptions. Title insurance is not required in Ontario, but it exists and is regulated by FSRA. A lawyer can explain what it covers and how it fits your purchase.

The Law Society of Ontario runs a Law Society Referral Service that offers a free consultation of up to 30 minutes with a lawyer or licensed paralegal. That can be enough to find out which questions to bring back to your own lawyer.

Timing the purchase and the sale

Many downsizers have to buy and sell around the same time. A purchase with a condition to sell, a bridge arrangement or a sale-first approach each carries different risk. Our guide to buying first or selling first covers the trade-offs. If a move involves clearing a house of decades of belongings, clearing out your home and moving day is a practical companion.

When you are ready to talk to someone, contact us to reach an agent on the operating team at eXp Realty. They can help you compare specific listings of each type, and your lawyer should still check the documents.