Divided vs. undivided co-ownership: Do you know the implications?
When you’re looking for a condo, one of the first things you should check is whether the property is divided or undivided co-ownership. Depending on the type you choose, the implications will be different.
While divided co-ownership is most common on the market, you should be aware that the undivided type can occur in the event of an inheritance or when the owners of a multiplex decide to turn it into a condominium building.
Divided co-ownership generally gives the joint owners more powers. Each one owns a part of the building and has exclusive rights over that part. This is known as the private portion. But the owners also own a share in the common areas of the building, such as the parking lot, pool and elevator.
In real terms, this means the owner can make minor changes to their private portion without having to ask for authorization from the other co-owners. This applies so long as the structure and common areas are not affected, and so long as the desired changes comply with the terms of the Declaration of Co-ownership. This notarized document includes all the regulations for living in the building.
Undivided co-ownership only exists when several people exercise their right of ownership together over a single building. Each of the co-owners holds a percentage share in that right of ownership as well as a right to occupy their apartment. Together the co-owners in indivision are responsible for shared costs like municipal and school taxes.
For the undivided joint ownership to subsist, an Undivided Ownership Agreement must be signed by the co-owners. This agreement represents their particular law and includes for instance the rights and obligations of the co-owners regarding enjoyment of the premises, expenses, maintenance and improvement obligations, and overall building administration rules. It also indicates how the sharing will be done if the undivided co-ownership agreement is ever terminated.
You should be aware that co-owners in indivision can also take out an independent mortgage on their share of the building.
In a nutshell: Remember that in a divided co-ownership, the joint owners have rights over their own unit and a shared right over the common areas. In an undivided co-ownership, the joint owners share a right of ownership over the whole property but have a right of use to certain sections.