Mixed use development is on the rise in North America and
includes a variety of significant considerations.
One important consideration relates to non-condominium strata
title developments. In these developments, positive obligations do
not run with the land and are only enforceable in contract against
subsequent owners. Furthermore, lawyers need to construct a regime
of permitted transfers, rights of first refusal to purchase
adjoining lands, and mandatory assumption agreements to make sure
that owners of a strata title mixed use project always have privity
of contract with their vertical or horizontal neighbours in the
A further consideration is the significance of a cost sharing
agreement. This agreement specifies, prior to commencement of
construction, who will be responsible for what cost, both hard and
soft, in the development and construction of a mixed use, mixed
owner project. A well-drafted cost sharing agreement can minimize
the chance of future disputes.
Lastly, it is typical in most mixed use projects to have a
shared services or reciprocal operating agreement post
construction. This agreement will potentially set out the following
responsibility for maintenance repairs and replacements for any
requirements for joint building insurance;
individual insurance for each owner's premises;
the right of first refusal to purchase an adjoining owner's
interest if it is put on the market;
restrictions on street level and building top signage that may
the creation of an insurance trustee regime for major damage
that might occur;
a governance process setting out regular meetings; and
the creation of an annual budget for shared facilities and
common area maintenance repair and replacement costs.
In addition to the foregoing, when each owner has their own
separate financing to arrange, matters can get complicated as each
lender will wish to review all major agreements.
Mixed use developments are complicated but workable, and can
result in great profitability.
* Vedran Simkic is an Articling Student at Aird & Berlis
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guide to the subject matter. Specialist advice should be sought
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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