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What is the difference between a Co-operative and a Condo?
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.
Condominiums:
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 & 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.
What is a Status Certificate?
A Status Certificate is a short report on the current status of a condominium corporation. If you are buying a resale condominium, it is important that your agreement of purchase and sale is conditional, upon review of the Status Certificate by your lawyer.
The Status Certificate provides valuable information directly from the condominium corporation, examples of such information include, but are not limited to: Arrears or increases in common expenses; Whether any major work needs to be done to the building; The amount of the reserve fund and whether the reserve fund is sufficient for any major work. The Status Certificate also provides information about any claims against the corporation and whether the corporation is involved in any proceedings. This is important because if there are high value claims against the corporation and the corporation's insurance does not provide coverage; the corporation can either increase the common expenses or levy a special assessment against the unit owners. If you are buying a condominium, you need to know of any potential significant increase in your monthly common expenses.
The Status Certificate package includes the corporation's financial statements, declaration and by-laws. The financial statements are a good indication of a corporation's financial stability. The statements will show the trends in expenditures and receipts for previous years and provide comparisons of a corporation's actual and expected costs. The budget for the current year will also be included, identifying both the income to the corporation, and the amount of the reserve fund. The declaration of the corporation outlines the structure, rules and regulations of the corporation for example whether you can keep pets. The corporation's by-laws govern the corporation's functioning, i.e., electing the Board of Directors, meetings, notices etc.
Note: As your Realtor, we highly recommend you make your offer to purchase conditional on Status. You lawyer will review the above mentioned information, and provide you with a short summary, so that you can decide whether you to proceed with the purchase.
Resale vs New Condos
REASONS FOR BUYING RESALE:
- The building is actually built.
- You can actually see what the unit looks like & what the actual unit views are before you purchase.
- You can see what the building culture, structure & amenities are all about before you purchase.
- If the unit includes parking and/or locker, they are already on title, so you know where they will be.
- You have a definite closing date, there a no building delays.
- Usually neighbourhood amenities already exist.
- You already have building management in place & get an idea whether they are doing a good job (maintaining the building, staff etc.)
- There are no developer fees, or development levy costs in addition to your purchase price.
- You can examine a status certificate, confirm a number of different things: what the current maintenance fees are, if there are any large upcoming costs, any lawsuits, the number of tenants vs. owners etc.
REASONS FOR BUYING NEW:
- You get a selection of floor plans, exposure & floor -not what just happens to be available on the market at the time you are looking at resale.
- There are often various builder promotions: e.g. Lower prices, free upgrades, free maintenance, cash back etc.
- You can stagger your deposits.
- You can plan ahead.
- You can prioritize saving & spending to accumulate a larger down payment.
- You get to customize your unit & pick your finishes.
- You can plan & buy your furniture ahead of time, since you already have a floor plan to work with.
- You can participate in the running of the board of directors, by being elected or voting for the individual members.
ASSIGNMENTS NEW OPTION FOR CONDO BUYERS:
With a lack of condo listings, potential buyers are often forced into ‘multiple offer’ scenarios. And who can blame them for not liking the situation.
Another option is looking at the Assignment Market. That is buying a property that is not registered. Instead you buy the ‘right’ to buy the property when it registers. The paper!! That makes many Buyers nervous. More so, it makes lawyers who do not do this type of transaction very nervous as well, to the point of advising their clients not to do the deal! And agents who do not understand the transaction and who can not draw up the contract also stay clear.
Yes, it is a little more complicated but we have never had a deal not close and a buyer not eventually owning the real property!! But the best thing about the transaction is you avoid multiple offers and over paying on the list price. This is a huge benefit in today’s market.
Many of our Assignments involve the buyer moving into the condo during the ‘occupancy’ period, before it is registered
They pay the developer an occupancy fee (rent) instead of mortgage and condo fee payments. It is about the same. When the property registers, the Buyer just converts his payments. This occupancy period can be 6-12 months in bigger buildings!
While the Seller does not get all of his profit and deposits back until the registration date of the condo unit, both parties can save considerable monies in terms of land transfer taxes and closing costs which makes the wait worthwhile.
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The Assignment Option can be a win/win transaction for both the buyer and the seller.
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