Undivided co-ownership

Author: Claudia Chauvette, Lawyer, Chartered real estate broker

Most people are familiar with divided co-ownership, a form of housing better known as “condominium” or “condo”, a unit in a building usually located in a more modern and urban environment, but few know that this type of property exists in two forms that entail different responsibilities. Divided and undivided co-ownership.

In a divided co-ownership, the owner owns the entire unit in which they live, as well as a portion of the common areas. The percentage of what the owner owns is called their share.

In an undivided co-ownership, the owners jointly own the entire building and enjoy the exclusive use of their unit. Contrary to a divided condo, there is only one lot number for all shares. As such, there is also only one municipal tax bill, which can be a monetary advantage.

The undivided condo can have a certain appeal since it is often located in a sought-after neighbourhood or in a building with a certain prestige. However, the CMHC (Canada Mortgage and Housing Corporation) does not insure loans for an undivided co-ownership, so you will need to, at least, put a 20 % down payment at the time of purchase. This can complicate the resale of such a condo since the buyer pool is reduced.

On the positive side, undivided ownership is not necessarily permanent.  In fact, subject to certain conditions, undivided co-owners of a building can apply to the Régie du logement for a conversion into divided condominiums.

On the negative side, in an undivided ownership, it is often not permitted for the owner to rent out the condo.

All in all, an undivided condo can be a great opportunity if the property meets your needs. However, before purchasing an undivided condo, it is important to conduct a detailed verification of the building's condition and carefully read the undivided ownership agreement.

This article contains general legal information and should not replace legal advice from a lawyer or notary who will take into account the specificities of your clients' situation.