Co-op Mortgages

Rising costs in the housing market is causing home buyers to seek alternate forms of home ownership. Co-operatives allow buyers to purchase shares in the Co-operative Corporation and becomes Shareholders in the Corporation. It presents a more affordable method for a buyer to purchase a home. Before making your decision, it is important to understand the difference between the various legal structures of obtaining Ownership and Occupancy of a real estate.

Luminus Financial is one of the few financial institutions in Ontario that can facilitate financings for this type of home ownership.Our mortgage professionals are experienced in handling Condominium and Co-operatives financings and can help you understand the difference between the options. Call us at 1.877.782.7639 today and we can assist you in assessing which type of ownership is more suitable for you.

Breaking it down: Condominiums & Co-ownerships

Condominiums and Co-operatives are legal structures that define both the exclusive rights and the shared rights of individuals who purchase a Unit/Percentage Interest in buildings created as one of these types of legal entity. The table below outlines the similarities and difference between Condominiums and Co-operatives.

Important features of condominiums and co-operatives for the purchaser:

CondominiumCo-operative (No Shared Liability)

Purchaser acquires ownership of an individual Unit by a Deed.

The Co-operative Corporation is the only registered owner of the property (registered on title). The Purchaser does not own Unit but acquires shares in the Co-operative Corporation and is a Shareholder in the Co-operative Corporation.

Purchaser acquires ownership to individual Unit by a Deed pursuant to provisions of the Condominium Act, 1998.

Purchaser acquires the exclusive right to occupy a specific Unit through a Proprietary Lease, Shareholder’s Agreement, Occupancy Agreement, not a Deed.

Purchaser acquires a percentage interest in the common areas of the building.

Purchaser acquires a percentage interest in the Corporation commensurate with the percentage interest represented by his/her shares, based on the size of the subject Unit.

Purchaser becomes a Member of the Condominium Corporation which:

(a) manages the affairs of the building on behalf of the members according to the Condominium Act, 1998, and more particularly the Declaration, By-laws and the Rules and Regulations; and,

(b) represents the interests of the Owners.

 

Purchaser becomes a Shareholder of the Co-operative Corporation which:

(a) owns and manages the affairs of the building on behalf of the shareholders according to the Co-operative/ Shareholder/ Occupancy Agreement, the Corporation’s By-laws, and the Rules and Regulations;

(b) grants exclusive occupation rights to shareholders of a specific Unit; and,

(c) represents the interests of the Shareholders.

Purchaser can individually finance her/his own Unit. Large numbers of lending institutions finance purchases of Condominiums by way of a Mortgage and/or a Line of Credit.

Only a few lending institutions finance these types of purchases of shares and/or grant Loans and/or Line of Credit on these types of properties.

Owner is assessed for percentage share of common expenses, based on the size of Unit in comparison to the whole building.

Purchaser can finance the Unit, using his/her shares and leasehold interest in the Unit, only if there is no prohibition on pledging shares as security.

Owner receives an individual property tax bill and pays for his/her own property taxes.

Shareholder pays for his/her percentage share of property taxes as a part of their monthly common expenses. The Co-operative building is assessed and taxed as one structure. Shareholder does not receive an individual tax bill.

The Condominium Act, 1998 requires a Reserve Fund to be established for maintenance of building. Must comply with the provisions of the Act and generally with the Reserve Fund Study. Study must be updated every 3 years.

No legislation requiring a Reserve Fund to be established for maintenance of building. Most Co-operative Corporations do have a Reserve Fund for maintenance of building. No legislation exists requiring or outlining requirements for a Reserve Fund Study. No legislation exists requiring compliance with the recommendations of a Reserve Fund Study.

Owner can participate in management decisions by sitting on the Board of Directors and / or voting as a member of the Condominium Corporation at Annual General Meetings.

Shareholder can participate in management decisions by sitting on the Board of Directors and / or voting as a shareholder of the Co-operative Corporation at the General Annual Meetings.

Owner is subject to the Declaration, By-laws and Rules and Regulations of the Condominium Corporation.

Shareholder is subject to the Co-operative/Shareholder/ Occupancy Agreements, By-laws, Rules and Regulations of the Co-operative Corporation and other contractual documentation.

Owner does not need consent of the other owners or the Condominium Corporation to sell his/her Unit.

Shareholder does need consent of the Board of Directors of the Co-operative Corporation to sell shares, and assign Lease for Unit.

Owner does not need consent to rent or mortgage his/her Unit.

Shareholder does need consent of the Board of Directors to rent their Unit, which is not unreasonably withheld. There is the odd exception. Buyer / existing Shareholders require consent to pledge his or her shares as security for a loan and to rent their Unit. *Note: Some buildings prohibit the pledging of shares and the Assignment of the individual’s Occupancy rights.

Purchase of a Unit should be conditional upon receipt of a Status Certificate satisfactory to the Purchaser and their lawyer which identifies any outstanding or pending payments, special assessments, or legal actions, re: the Owner, the Unit or Corporation, amongst other items together with all other documents required to be included.

Purchase of a Share should be conditional upon receipt of an Estoppel Certificate satisfactory to the Purchaser and their lawyer which identifies any outstanding or pending payments, special assessments, or legal actions, re: the Shareholder, the Unit / Shares or Corporation amongst other items, together with all other documents which are included.

Condominium Corporations must have, with certain limited exceptions, yearly Audited Financial Reports.

Co-operative Corporations may (but are not required to) have yearly audited Financial Reports.

Condominium Corporations are almost always managed by a Professional Management Company or may be self-managed.

Co-operative Corporations are managed by a Professional Management Company, or in a number of cases may be self-managed.

 

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