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What is a Condominium?

A condominium building is like an apartment building. However, instead of renting your individual apartment (unit), you own it. Others who live in the building also own their units. In addition, all of the owners in the building collectively own and share the common areas (hallways, laundry room, exercise room, etc.). So when you invest in a condo, you invest not only in the unit you're purchasing, but indirectly in the units of others and in the common areas as well. You invest in the philosophy that collectively, all unit owners will help run your building and maintain a satisfactory or even exemplary standard of quality for the benefit of all owners.

This is done by electing a Board of Directors, who in turn hires a management company to oversee building maintenance, record keeping, and the collection of Condo fees. The Board also solicits support from the unit owners for the distribution and execution of things that need to be done to keep the building running well.

Remember that it is your responsibility to thoroughly investigate the pros and cons of your new purchase. If you need help interpreting documents, you may want to seek assistance from the Board of Directors of the condo you are considering or counsel from a real estate lawyer or someone with the professional expertise and qualifications to assist you.

Nonetheless, despite the few disadvantages of condominium living, condos continue to remain the most popular form of real estate ownership here in Toronto and the metropolitan area.

Cooperatives (or Co-op Condominiums)

Ownership of a cooperative unit is generally considered and interest in personal property because the Cooperative Corporation has ownership of the entire property (the entire apartment building if we use our example from above). This corporation, in turn, grants each member the right to occupy a unit: herein lies the most significant difference between Cooperative and Condominium ownership. One's ownership interest in the corporation and the right to occupy a unit is considered an ownership interest in personal property and not in real estate. Nonetheless, the daily operation of Cooperative and Condominium associations is very similar.

The difference between a condo and cooperative is in the type of ownership. If you have a condo apartment you own a certain area from wall to wall. If you have a cooperative apartment you own together with other tenants the whole building and a share of this common property belongs to you.

What is the Difference Between a Co-op and a Condominium?

In general terms: A co-op is a corporation that owns real estate. If you belong to a co-op, you own stock in the corporation and the exclusive right to a given unit. There is usually an underlying mortgage on the property and your co-op fee includes some or all mortgage payments as well as other costs.

With a condo, you own real estate and you have access to certain common facilities. The condo is typically responsible for exterior maintenance and you pay a monthly condo fee. You have your own title and mortgage, so mortgage costs are not part of the condo fee.

What are some of the basic questions to ask when looking at a co-op?

Co-op ownership raises a number of issues that should be of concern:

  1. What is the value per unit of the underlying mortgage?
  2. What is the voting scheme – one vote per unit or voting based on unit size.
  3. Is there a reserve fund for repairs? If so, is it adequate?
  4. Are major repairs anticipated in the next two years? If so, how will they be funded?
  5. Is the co-op now facing or likely to face a lawsuit for any reason? If yes, what are the possible damages?
  6. What pricing trends are associated with the co-op? Are prices rising? Falling? Can you review all sales for the past year?
  7. Is a property tax rise known or expected?