My husband and I are interested in purchasing a condo. Is buying one very different from purchasing a house? How do we get started? (Part Two)
Buying a condominium (condo) is a bit different from acquiring a detached or semi-detached home, so the best way to get started is to work with both a real estate salesperson who has handled similar purchases, and a lawyer who is insured to practice real estate law; they can answer your questions and help you navigate your way through the transaction.
The biggest distinction is that when you purchase a condo, you’re buying a unit within a building, and possibly also a parking space and/or a storage locker. You aren’t obtaining ownership of the land that your unit is on or any common areas outside your unit.
A slightly different ownership model is a cooperative, or co-op. Acquiring an interest in a co-op involves purchasing shares in the corporation that owns your building rather than purchasing a specific, legally described unit in a building. Unlike the condo model, you don’t actually own your unit; instead, your shares entitle you to use an available unit (the one that you’re “purchasing”) in the building under the terms of a lease with the corporation. If you’re considering a co-op, be aware that there may be some unique financing considerations for this type of ownership: credit unions are often the only lending institutions that will extend financing for a co-op. Also, you will need the approval of the co-op’s board of directors to buy shares and move in.
When you buy a condo (or shares in a co-op), you are expected to pay monthly fees and to follow the corporation’s by-laws, which may prevent you from renting out your unit to a tenant, owning a pet, or even hanging the wrong window coverings. Ask your lawyer to review the by-laws so you fully understand them.
You should also direct your lawyer to review the condo’s status certificate; this is a crucially-important document that contains information about the physical and financial state of the condo corporation and the building. It will tell you if the previous owner of your unit was up-to-date in paying their fees, whether the building needs major repairs, or if the corporation is experiencing financial problems, which could mean higher monthly fees or special assessments down the road. The cost of a status certificate is by law limited to $100.
To better understand your rights and responsibilities as a condo owner, I strongly recommend visiting the Condominium Authority of Ontario (CAO) website for more information. Like the Real Estate Council of Ontario (RECO), the CAO was established by the Government of Ontario to serve the public interest by protecting consumers and supporting an informed real estate marketplace.
If you have a question for Joe about the home buying or selling process, please email firstname.lastname@example.org.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.