BUYING A LOFT OR CONDO – FREQUENTLY ASKED QUESTIONS
A condo or loft can be an ideal option, since it may cost considerably less than single family homes in the same neighbourhood.
HOW DO CO-OPS AND CO-OWNERSHIPS DIFFER FROM CONDOMINIUMS?
In an equity co-operative the owner is not registered on title but receives a form of proprietary ownership. The corporation is registered on title and issues a share certificate to each owner. The corporation owns the property and the rights of occupation come from a separate agreement that sets out the exclusive right of each owner to occupy a certain unit. This agreement also sets out the owner’s obligations to pay a proportionate share of the building’s mortgage, operating expenses and property taxes. Since responsibility for payment of taxes and mortgage in a co-op is joint, if one owner goes into default, the other owners must make up the shortfall or risk losing their equity. Many older co-ops have no mortgage and Buyers must pay cash since most banks are reluctant to finance share certificates. However there are some institutions that provide financing for these types of properties.
In a co-ownership, each Buyer has his or her percentage interest in the property registered on title. Possession of an individual unit in the property comes by way of a separate agreement which sets out each owner’s rights. Mortgages are often available for this type of property through credit unions and trust companies. Have us check with the Listing Sales Representative.
As a result of these factors, reselling a co-op or co-ownership is often more difficult than selling a condominium. Make sure you work with a lawyer who is familiar with this area of real estate law.
HOW ARE CONDOMINIUMS OWNED?
Condominium ownership is generally divided between two or more parties, each of whom owns a portion of the structure separately and a portion of it in common. For instance, if you are an owner in a high rise apartment building where there are several other owners, you own a unit individually and it is legally registered in your name. You also own a proportionate share of the common areas in the development. These generally include the outside grounds, recreational facilities, lobby, stairs, halls and elevators, as well as the air conditioning, electrical and plumbing systems. Some common areas may be reserved for the exclusive use of specific owners such as roof gardens, balconies, parking spaces and storage lockers.
As a unit owner, you are automatically a member of the condominium corporation. In essence, you’re a voting member of a self-governing community with one vote per unit.
WHAT IS INCLUDED IN THE MAINTENANCE FEES?
In addition to the costs associated with owning your own unit (mortgage payments, taxes and so on), you are also required to pay your shared cost of maintaining the common areas in a monthly maintenance fee. It’s important to know what is and is not included in your maintenance fee. For example, heat may be included while the cost of electricity may not be.
WHAT IS A RESERVE FUND?
In Ontario, at least 10% of this maintenance fee must be held in a reserve fund to pay for minor repairs on items like heating systems, roofs and plumbing. If you are considering buying a unit in an older building, be sure that the reserve fund is sufficient to pay for any anticipated major repairs. Newer buildings may not have have had time to accumulate a large reserve fund. Information on the status of the building’s reserve fund is contained in the Status Certificate.