The ever-increasing value of real estate and successively increasing interest rates affecting rental costs are prompting tenants to consider the possibility of ownership ownership. Would co-ownership be a solution?
When it comes to co-ownership, the question immediately arises, divided or undivided?
Let’s see the elements that characterize each of these options.
Shared Ownership
- Minimum deposit: 5% of the purchase price.
- If the deposit is less than 20% of the purchase price: CMHC-type mortgage loan insurance required.
The owner of a split co-ownership association is the sole owner of his home and a share of the common areas of the building that he shares with the other co-owners. A land register number is assigned to his apartment and he receives a property and school tax statement. He can sell his unit as he pleases. He can also rent out his condo by following the rules of the co-ownership contract. A syndicate of co-owners manages and maintains the building, for which condominium fees are charged.
A co-ownership declaration regulates the rights and obligations of the co-owners.
undivided co-ownership
- Minimum deposit: 20% of the purchase price.
- CMHC-type mortgage loan insurance not required.
As the name suggests, undivided joint ownership is not fragmented. The co-owners own a share in the building and a unique cadastral number is attached. As a rule, a uniform property and school tax account is issued. All co-owners do business with the same financial institution, which grants each a limited liability mortgage loan according to their share. This protects them from creditors if one of them runs into financial difficulties and is unable to meet their obligations. In order to sell, you must first offer your share to the other co-owners. Regarding leasing, financial institutions prohibit it. Given all these peculiarities, it is preferable to sign a co-ownership agreement to regulate the rights of the co-owners. This document, which must be renewed every 30 years, is filed with the Quebec Land Registry so that future buyers are informed.
No interest group manages the building, the co-owners have to manage themselves. Generally, condo fees are lower than the split option.
Finally
Whether shared or not, co-ownership has many supporters.
Shared ownership will interest a group of people who share a common bond, such as B. Members of a family or a group of friends. There are several undivided projects in major Quebec cities without people necessarily having a common connection. However, the range of undivided co-ownership is limited. And not all financial institutions accept this type of project. Despite everything, some prefer this variant, which is more in line with their values.
tips
- In order to design an undivided or shared co-ownership project to the satisfaction of both parties, it is advisable to bring in specialists from different fields.
- The real estate agent identifies the ideal property in the desired area.
- The lawyer or notary provides information about the co-ownership contract, which avoids trouble.
- The auditor or tax expert provides information about the tax aspects, mainly about the concept of the main residence.
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