When you’re making a big purchase like a condo or a co-op, there are many things to consider. There are big-ticket considerations and then there are the little things. But what about the legal aspects of your purchase and throughout your ownership? Are there considerations to watch out for that are specific to buying a condo and these types of properties?
There certainly are!
Condos and co-ops are a type of shared ownership where multiple units make up a larger building or development. These properties have their own specific legislation that governs the rights, responsibilities, and obligations of owners, buyers, and sellers.
To differentiate the two developments, let’s get into their definitions:
Condo – Privately owned units within a building or complex. Condo owners own their units but share possession of common areas and amenities.
Co-Op – Refers to housing cooperatives. Residents own shares in the cooperative corporation as opposed to their own units, and they are entitled to a specific unit within the co-op. Owners/residents are usually required to take part in the management of the entire cooperative. This can include contributing to decisions such as the election of the board of directors, and other important voting matters.
As a buyer or a seller of a condo or a co-op, you should be aware of the following legal considerations:
- Legal Documents
- Reserve Funds and Other Charges
- Lawsuits
- Fees and Assessments
- Insurance Requirements
LEGAL DOCUMENTS
There are bylaws, declarations, and rules that form the rights and obligations of owners. Ensure that you review all of the governing documents in the status certificate with care. It’s also best practice to seek legal representation to review and ensure that you know exactly what your rights and responsibilities are. Since these documents vary by property, don’t assume that your new condo is governed in the same manner as your last property. They can be different regarding parking, common spaces, pet ownership, subletting, etc.
RESERVE FUNDS AND OTHER CHARGES
Condos and co-ops keep a reserve fund to cover the cost of the unforeseen unexpected repairs, replacements, or future expenses. This fund is maintained to cover these expenditures without having to unexpectedly and drastically raise your monthly condo fees. Make sure that you have a lawyer review the building’s financials in the status certificate as part of your agreement to purchase. Be familiar with the standing of this fund during your purchase and ownership, and any potential and obligatory levies that may be required of owners.
LAWSUITS
Any current litigation that may affect either your future condo fees or the reputation (and thus resale value of the condo) will be disclosed in the status certificate. It’s important to have your real estate lawyer review this section to assess the validity, degree and impact of any such claims or proceedings. Once you have ownership, it’s a great idea to attend the general meetings or even get involved on the condo board so that you can be well versed in the current state of the property.
FEES AND ASSESSMENTS
Both of these properties usually require owners to regularly pay fees/assessments. These expenses cover shared expenses, such as maintenance of the property, repairs, and replacing appliances, HVAC units, and other aspects of the property. Make sure you have a clear understanding of what’s included and to consider these fees in your monthly budget.
INSURANCE REQUIREMENTS
Insurance for condos and co-ops differs from detached and other traditional homes. Know what your responsibilities are, and ensure that you are in compliance with the property’s insurance policies. This will help to protect your investment.
There are more important legal details to be aware of when buying a condo or co-op, so be sure to read Part Two coming soon!
Are you ready to move to the next stage? Let’s chat. Send me an email (hillary@hillarylane.ca) or text/phone (416-882-4707)
Photo by Nadine Shaabana on Unsplash
