Co-Ownership in a Building

CO-OWNERSHIP IN A BUILDING

The law provides for the existence of two types of co-ownership

Purchasers of a condominium property in co-ownership must properly inform themselves as to the extent of their rights and obligations. The first thing is to know about the different types of co-ownership.

DIVIDED CO-OWNERSHIP (CONDOMINIUM)

The divided co-ownership provision, as the name suggests, makes it possible to split a building into parts. Each part belongs to one or more persons. Each owner of a part has the exclusive ownership of a privative unit of the immovable, in addition to having an undivided right of ownership, i.e., a share corresponding to the relative value of their part, in the common areas of the building, which are the common property of all the co-owners. In addition, the declaration of co-ownership may ensure that certain common areas are reserved for the exclusive use of a co-owner (e.g., a private balcony adjacent to a private unit may be a common area for restricted use).

Let’s say you buy the second floor condominium in a divided co-ownership building with three floors. You are the sole owner of this unit (private unit). You are also co-owner, with the owners of the first and third floor dwellings, of a share of the common parts of the building (e.g., land, exterior walls, roof, etc.).

In the illustration, what is in gray belongs only to you. What is in white belongs to all co-owners.

Financing

Can I borrow to buy a co-ownership in a building?
Each owner of a part of a co-ownership may offer a mortgage on that part as security for the repayment of the sums borrowed to make the purchase. Each mortgage is individual. No co-owner is threatened by the mortgage situation of any neighbour.

Special Precautions

What precautions should I take before buying?
Each divided co-ownership (condominium property) is governed by a declaration of notarized co-ownership. It goes without saying that the purchaser must always read the declaration of co-ownership and thoroughly understand its content and scope before committing to anything. A wise buyer should also check out the quality of the building management procedure. The balance sheet of expenses and condominium fees must also be consulted carefully. Before signing any document, consult a specialist: your notary.

Your Rights and Obligations

What does the declaration of co-ownership include?
The declaration of co-ownership is what divides the building into parts. It includes the deed of constitution of co-ownership, the building by-laws and the description of the parts.

The deed of constitution of co-ownership determines the relative value of each part and indicates the method used to establish it. It also uses this relative value to determine the contribution owed by each part to the common expenses of the immovable and to the compulsory reserve fund created pursuant to the law. Still according to this relative value, the deed of constitution also assigns the number of votes that go along with each of the parts. The deed defines the purpose of the immovable, that is to say the use (commercial or industrial, for example) that the owners may make of it, as well as the purpose of the private units and common areas. It also specifies the respective powers and duties of the board of directors of the syndicate and the meeting of co-owners.

The by-law of the immovable establishes the rules relating to the enjoyment, use and maintenance of private units and common areas. For example, it may prohibit the presence of certain animals in apartments. The same by-law contains the rules governing the operation and administration of co-ownership, in particular as regards the composition of the board of directors and the conditions relating to the office of director.

The description of the parts contains the cadastral designation of the units and common areas of the building. It also contains a description of the real rights on the immovable and those in its favour.

The Syndicat and the Meeting of Co-Owners

What is the role of the syndicat and the meeting of co-owners?
The syndicat is created as soon as the condominium is constituted. Its mission is to ensure the preservation of the building, its maintenance and its administration. The board of directors acts on behalf of the syndicat. The directors prepare the budget for the condominium.

The condominium meeting considers issues of interest to all co-owners. Each co-owner is entitled to exercise his right to vote based on his number of votes.

Sale and Mortgage

What are the conditions for the sale and mortgage of a condominium?
Each co-owner is free to sell or mortgage his co-ownership. However, the declaration of co-ownership may contain restrictions in this respect; it is advisable to ask your notary about the precautions to be taken.

UNDIVIDED CO-OWNERSHIP

The immovable held in undivided co-ownership belongs to several persons, the undivided co-owners. None of these co-owners owns a unit of the immovable, but each of them owns a share in the entire building.

For example, you buy a triplex with two of your friends and your respective down payment is equal. After the purchase, you decide to move into the second floor unit. This accommodation does not belong to you as your two friends are co-owners with you. Similarly, you are co-owner with them of the first and third floor dwellings. You and your friends are joint owners of the entire triplex (see the illustration in white) . In this example, your share in the building is one third each.

The Formalities

How do we create an undivided co-ownership?
Undivided co-ownership or joint ownership arises without formality when several persons, the undivided co-owners, acquire the same property. It is in the interests of all parties to the purchase however, especially in the case of an immovable, to establish a written agreement between them. An undivided co-ownership agreement relating to an immovable must be published in order to be binding.

Financing

Can each undivided co-owner jointly mortgage his share in the building?
The Civil Code of Québec provides that each undivided co-owner may take a mortgage on their share of the immovable alone. The other joint owners are in no way liable in the event of default of the mortgagor; the law even grants special rights to them at that time.

Sale

Is each undivided co-owner free to sell or assign his share?
Each undivided co-owner is free to sell or assign his or her share in the immovable unless otherwise provided for in the written agreement. However, unless exception, the law provides for the right of the other joint owners to reject the new purchaser within the required time by reimbursing him the price of the sale or transfer plus the costs. However, the co-owners must exercise this right within one year of the sale or transfer of this share.

Duration

How long can undivided co-ownership last?
The written agreement cannot provide that the joint ownership will last more than thirty years. However, this agreement may be renewed.

The Content of the Agreement

What provisions can be advantageously included in an agreement of undivided co-ownership?

The agreement may relate to:

• The duration of the agreement
• The rights and obligations of co-owners in relation to the enjoyment of the premises
• The sharing of maintenance and renovation obligations
• Sharing of expenditures
• Ownership of improvements
• Restrictions on sale
• The rules of administration of the building
• The rules governing sharing in the event of the termination of joint ownership

Your notary may advise you adequately on the contents of a co-ownership agreement.

The Conversion of a Rental Building

An owner of a building containing one or more dwellings who wishes to convert the building into divided co-ownership (condominiums) must respect certain strict rules.

Under the law, the conversion of an immovable to divided co-ownership is prohibited in the territory of the Communauté urbaine de Montréal, unless the municipality where the immovable is located has adopted a by-law allowing it.

Conversion is permitted in other cities of Québec, unless prohibited by a by-law.

In all cases, the first step of the owner is to inform the municipality where the building is located to determine whether the project is allowed.

Certain special rules also apply in the case where all the dwellings in the immovable concerned by the conversion are occupied by undivided co-owners. The law provides for the rights and obligations affecting an owner who has proceeded to the conversion of the building as well as those of the tenants of that building.

Source : Chambre des notaires du Québec (Translation)