Co-ops and co-ownership properties offer you a chance to live in a condo under specific ownership arrangements that are different from direct ownership.
What Do Co-ops and Co-ownership Buildings Have in Common?
On the whole, Toronto co-ops and co-ownership buildings are slightly cheaper than comparable properties in the neighbourhood. Also, because most such buildings were built in the 1950s, they now reside in lucrative and even prominent parts of the city. For these reasons, co-ops and co-ownership buildings offer great value if you are willing to try out the alternative to a traditional condo.
Co-ops Share a Company
Owning a co-op is not the same as owning an apartment. Instead, you own a share in the company that owns and manages the apartment building. Of course, this share entitles you to living in one of the apartments, but it is not the same in the eyes of lenders.
A bank will happily issue a loan collateralized by a title on a property, but it is a little harder to collateralize a title on a (share of a) company. Some smaller lenders may refuse to get involved with what may be for them a non-traditional transaction.
In addition, you have to consult the management and/or other owners if you want to make changes to the apartment you live in, or buy or sell a share. This is because you are partially responsible for many of the company’s outlays (such as taxes, insurance, etc.), and all other owners are as well in virtue of common ownership. Thus, if you default on a payment, the other owners would have to bear the cost.
When you live in a co-op condo, the traditional statutory condo-owner protections do not apply either.
As always, these potential disadvantages are offset by one major advantage: the purchase price. Because you are buying into such a specific scheme, you have a chance to get a very good deal on properties in some of the most prominent locations in Toronto.
Co-ownership Shares a Title
With co-ownership properties, the owner actually shares in a title on the entire property. The ownership is not directly related to specific apartments, but it does entitle the owners to live in them.
Because of the direct-ownership structure, it is easier for co-ownership condo owners to take out a mortgage on their title share. Also, there is less interference from the condo board when one decides to buy or sell her or his share.
Co-ops and co-ownership properties are certainly an interesting alternative to regular property ownership of which many people are not too familiar. Are you up for the adventure?
Whatever you preference, you can start searching for Toronto condos for sale right now.
This article is based on extremely informative material by David Larock, an expert on fringe mortgage products and an Ontario mortgage planner. Read David’s post at mortgages for Co-op and Co-ownership condos.
9 thoughts on “Co-op vs. Co-ownership Properties”
Interested in Co-op properties
I have sent you an email directly to get the conversation started.
Do you deal in Co-ownership condos only? We are starting our search for a co-ownership detached house.
Like Wade we are starting our search to co-own a detached house in Toronto. Please contact us if this is something you can help with.
am interested in a three bedroom coop condo in North Toronto
Have sent you an email directly with what is available in the northern Toronto Co-op and Co-ownership markets currently.
I am looking to relocate in Toronto in a owned coop unit. Do you have a list of locations?
I have a warehouse conversion residence in the Beach in Toronto that would perfectly suit co-ownership. One warehouse is a newly renovated, 2,000 sq ft beautiful modern home, and the other 4,000 sq ft is an open raw space with a brand new HVAC. Both have multiple car parking. I am interested in selling both units. There is a potential buyer for the space raw (a current tenant). We are on mls and currently have a listing agent who’s unfamiliar with co-ownership. Is this something you can help us with?
I stumbled across your posting and I am interested in a co-ownership detached house in Toronto, especially the downtown core. Any information would be appreciated.