If you’ve decided to trade the stresses of owning a freehold house for the convenience of living in a building, there are three ownership options for you to consider.
The most common is a condominium, but flying under the radar are co-operative and co-ownership buildings throughout the city.
Buying into a co-op or co-ownership is a great option for those looking for an apartment-style living at a lower price than a traditional condo. They look and feel for the most part like a condo, but there are a few notable differences:
- Condo: You own your unit and receive a deed for it. Along with owning the unit, you share an interest in the common elements of the building with your fellow Condominium Corporation members.
- Co-op: You own shares in the private company that owns the building and by owning those shares you are given exclusive rights to occupy a specific unit in that building. Potential owners are also interviewed by the board.
- Co-ownership: You own a percentage of the building and your name (along with all the other owners) goes on title for the entire property. Like a co-op, you have exclusive rights to a unit in the building. Potential owners may or may not be pre-screened by the board.
Securing financing for co-op and co-ownership units is more difficult than a condo, for the simple reason that your collateral – shares or a portion of the ownership – is not as easy to foreclose on. However, there are a few lenders who, with a 20-30% down payment, will agree to a mortgage. The constraints in arranging financing keeps the value for these units down, as the buyer pool is smaller than for condos.
If you can clear the financing hurdle, there are many benefits to co-ops and co-ownerships. Budgeting your monthly expenses is easier, as the maintenance fees include your property taxes, and many of them also include heat and hydro. The buildings may not be shiny and new, but the layouts are larger and often have excellent floor plans. Most are low- or mid-rise and have a boutique feel. Finally, co-ops and co-ownerships tend to have stringent rules on renting out your unit, so there is a high percentage of owner-occupied units, and with that comes true pride of ownership among residents.
The catch? The turnover in these buildings is lower than their condominium counterparts. Also, there are a few pockets in Toronto that have several co-ops and co-ownerships, and other neighbourhoods without any, so you might have to leave your usual stomping grounds to get into one.
Buying and selling co-ops and co-ownerships in Toronto is a different process than buying a condo, complete with its own paperwork, conditions and procedures. We have plenty of experience with both, and we’re ready to guide you through the process, from musing to moving.
Questions about what co-op or co-ownerships buildings would best suit your needs? Call us directly: 416-735-4665