Co-ownership Mortgages

Rising costs in the housing market is causing home buyers to seek alternate forms of home ownership. Co-ownerships allow buyers to purchase an undivided percentage ownership in a building. 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-ownership 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: CONDOMINIUNS & CO-OWNERSHIPS

Condominiums and Co-ownerships all involve a building, structure or project that contains more than one unit. Aside from sharing that similarity, there are significant distinctions between their legal structures, rights, buyer financing, governing legislation, tax assessment, and ownership requirements. The table below outlines the similarities and difference between Condominiums and Co-ownerships:

Important Features of Condominiums and Co-ownerships at-a-Glance

CondominiumsCo-ownerships

 

Individual ownership of Unit

Yes

No; Buyer owns an undivided percentage ownership in the building; in some cases in addition to a registered Deed, Buyer also receives a share in the Co-ownership Corporation with right to exclusive use and occupancy of a Unit

 

Easy to finance

Yes

Limited

 

Consent needed to mortgage, finance or pledge (as applicable)

No

No

 

Consent needed to sell

No

Varies – in several buildings consent is required

 

Separate realty tax assessment

Yes

No – taxes are part of common expenses

 

Sharing of common expenses on a pro-rated basis

Yes

Yes

 

Participate in management

Yes

Yes

 

Affected by default of others

No

No

 

Shareholder relationship

No

No

The Essentials of Condominiums and Co-ownerships ― Compared

CondominiumsCo-ownerships

 

Nature of Unit ownership

1) Buyer obtains ownership of individual Unit by Deed which is registered on title

2) Buyer obtains exclusive ownership of the individual Unit, and a percentage interest in the common areas of the building

3) Buyer becomes a member of the Condominium Corporation

1) Buyer obtains ownership of a percentage interest by Deed, which is registered on title

2) Buyer gains exclusive right to occupy a specific Unit through a registered Co-ownership Agreement and through the provisions of that Agreement

3) Buyer becomes a member of the Co-ownership Corporation

 

Governing legislation

The Condominium Act, 1998

No specific Act; The Corporation is subject to the Ontario Business Corporations Act

 

Buyer financing

Buyer can mortgage his or her own Unit

Buyer can individually mortgage his or her interest in the Co-ownership i.e. mortgage their Unit

 

Governing documents

The Condominium Corporation administers the Declaration, By-laws, Rules and Regulations

The Co-ownership Corporation administers the Co-ownership Agreement, the Co-ownership By-laws, Rules and Regulations

 

Owner’s obligations as to conduct the Rules and Regulations

Owner is subject to the Declaration, By-laws of the Condominium Corporation

Owner is subject to the Co-ownership Agreement, By-laws, and the Rules and Regulations and other contractual documentation of the Co-ownership Corporation

 

Owner participation in management

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

Owner can participate in management decisions by sitting on the Board of Directors and / or voting at the Annual General Meeting of the Co-ownership Corporation

 

Limitations on owner’s right to sell, rent or mortgage

Owner does not need the Consent of the other Owners or the Condominium Corporation to sell, rent or mortgage his or her Unit

Owner generally does not need the Consent of the other Co-owners or the Co-ownership Corporation to sell, rent or mortgage his or her Unit. *Note: there are some buildings where the Consent may be required but Consent could be unreasonably withheld

 

Status or Estoppel Certificate

The sale of the Unit is subject to receipt of a Status Certificate which identifies any outstanding or pending payments, special assessments, or legal actions regarding the Unit or the Corporation; it also confirms that the Corporation has the required Building insurance

The sale of the Unit is subject to receipt of an Estoppel Certificate which identifies any outstanding or pending payments, special assessments, or legal actions, regarding the Unit or the Corporation; it also confirms that the Corporation has the required Building insurance

 

How Owner’s share of common expenses is calculated

Owner is assessed for a percentage share of common expenses (based on the size of the Unit in comparison to the entire building)

Owner is assessed for percentage share of common expenses (based on the size of the Unit in comparison to the entire building)

 

Role of the Corporation / Management of building

The Condominium Corporation: a) manages the affairs of the building according to the provisions of The Condominium Act, 1998; and, b) represents the interests of the owners. Often, a property management firm is hired for day-to-day management, although in some cases the Corporation may be self-managed

The Co-ownership Corporation: a) manages the affairs of the building according to the provisions of the Co-ownership Agreement, and other relevant documentation and in accordance with the provisions of the Ontario Business Corporation Act; and, b) represents the interests of the owners. Often, a property management firm is hired for day-to-day management, although in some cases the Corporation may be self-managed. *Note: some of the smaller Co-ownership buildings are not incorporated and are therefore not governed by the provisions of the Ontario Business Corporation Act. They effectively are Partnerships of the registered owners

 

Financial Management Reserve Funds

1) The Condominium Act, 1998 requires a Reserve Monetary Fund to be established for the maintenance of the building

1) There is no legislation requiring a Reserve Monetary Fund for the maintenance of the building, (although many buildings have established one). Some Co-ownership buildings are required to have a Reserve Fund in accordance with the provisions of their Co-ownership Agreement

 

Financial Statements

2) Condominium Corporations must have yearly Audited Financial Statements prepared in accordance with the provisions of The Condominium Act. *Note: certain exemptions for Condominium Corporation consisting of 25 Units or less

2) Co-ownership Corporations may or may not have yearly Audited Financial Statements prepared. If the Financial Statements are not Audited there should be some form of Annual Financial Statement prepared

 

Property Management

Condominium Corporations are almost always managed by a Professional Management Company

Co-ownership Corporations are almost always managed by a Professional Management Company or may be self-managed in some cases

 

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