What are the steps for acquiring a divided co-ownership?

Acquisition of a new immovable property is always an important step in a lifetime. It is exactly because it is a so important milestone that any future buyer should be informed in order to make a choice as enlightened as possible. It does not matter much that his choice is for a single family residence, an income immovable property or an immovable property held in divided or undivided co-ownership, in all cases he will have to make, beforehand, a reflection on his needs, his interests, his lifestyle, his capacity to finance his purchase without burdening unnecessarily his other activities.

This reflection will maybe lead you to consider the acquisition of a unit in a divided co-ownership, which in popular language is often called condominium. If this is the case, you must ask yourself some additional questions which are specific to this mode of ownership.

By purchasing a unit in a divided co-ownership, you become the owner of a housing unit and, in some cases, you will maybe acquire a parking or storage unit. You will also become the owner of a share in the common portions, that is to say in the portions which are of use to all the co-owners such as the structure of the building, the lobby, the elevators, the land and the access roads, etc.

You will thus have to be aware that you will become owner, and responsible, of a property which is more important than a simple dwelling unit or its parking. Member of a syndicate of co-owners, you will thus be responsible, collectively with all the other co-owners, for the whole building. It will therefore be necessary for you, during the regular meetings of the syndicate, to get along with them regarding the condition of the building, the works to be made there, at which frequency these works must be made and plan the pooling of the necessary sums of money for these works.

If you decide to go ahead, an offer to purchase will have to be drafted. A notary can assist you in this process, by preparing an offer to purchase complete and adapted to your expectations and those of the seller. It is important to know that the offer to purchase must provide the preparation by a land surveyor of a location certificate in good standing and that, not only on the private portion which interests you, but on the whole co-ownership, in order to have an overview of the building and to be informed of the irregularities, if irregularities there are.

The offer to purchase must also be conditional to an inspection of the building and of the dwelling unit in order to avoid unpleasant surprises. The inspection made by a professional building inspector is a step not to be neglected. The inspection report of the unit to be acquired must not only describe the actual condition of the premises, but also an overview of the works which will be necessary in the coming years. You will thus be able to judge the quality of the construction, evaluate the eventual importance of your financial contribution in the forthcoming years and not risk to be surprised by special contributions. It is important, at this stage, to choose a qualified building inspector and, especially, to read attentively the inspection report concerning your immovable property.

Why such an inspection? As promisor-buyer, you must be on the lookout for works to be made over the coming years in order to properly evaluate, and adequately control, the common expenses of co-ownership (the "condo fees") as well as your contribution to the contingency fund. These data can seem trivial when purchasing, but it is of paramount importance if we evaluate the needs of the co-ownership for the long term. What is the amount of common expenses of co-ownership required for the immovable property sold? Are these expenses reasonable? Does it cover all the expenses necessary for the maintenance of the immovable property? The law requires the constitution of a contingency fund to cover the costs of major repairs to be made on the building. Are the sums deposited in the contingency fund sufficient to pay, for example, the predictable repairs of the next three years? In fact, this amount must represent at least five percent (5%) of the total contribution to the common expenses. This portion of the contingency fund attributable to the purchased unit will have a positive effect on the value of the latter and the solvency of the co-ownership in general. It is thus to say that this simple verification is of a crucial importance because it reflects the financial health of the co-ownership.

Furthermore, a new section of the Civil Code of Quebec allows a promisor-buyer to request from the syndicate all the documents or information concerning the immovable and the syndicate that will enable him or her to give an informed consent. Subject to the provisions relating to the protection of privacy, the syndicate is bound to provide the aforementioned detailed documents and information to the promisor-buyer, at the latter's expense.

A section of the Civil Code of Quebec, sometimes neglected, can also make the difference in the choice of a private portion rather than another one within an immovable property in divided co-ownership. Indeed, section 1069 of the Civil Code of Quebec provides that whoever acquires a unit in divided co-ownership is bound to pay all the common expenses due relatively to this unit at the time of acquisition. It is going to say that a statement of the expenses due must be required from the syndicate, in order not to be held responsible for the debts of the previous co-owner towards the syndicate.

And what to say about the ongoing legal proceedings or about to be instituted against the syndicate, against a third party or an owner? Nobody wishes to acquire a unit in a divided co-ownership where judicial disputes can entail expenses affecting the solvency of the co-ownership or encumber the contingency fund established at the time of creation of the co-ownership.

The whole co-ownership must be managed as an entity in itself. In fact, any co-owner will have to make sure of the validity and sufficiency of the amount of the insurance policy for damage issued in the name of the syndicate of co-owners to protect the value of his fraction and assure the refurbishment of the building in case of a disaster. It is important to understand that this last policy, taken out by the syndicate of co-owners, does not cover the furniture nor the improvements made to the dwelling units. You will thus have to take out an insurance policy for damage covering these last elements as well as a liability insurance.

Furthermore, as promisor-buyer, you must read attentively the declaration of co-ownership. In all cases, whether it is about a unit located in a newly built co-ownership or an older unit, it is important to be acquainted with this declaration. The latter governs the operation of the co-ownership, sets out the by-laws and supervises the coexistence of the co-owners.

In the case of a new unit, it can be relevant to consult the offered warranty plans. These plans vary from one project to another and can influence the choices of the consumers. Imagine a dwelling unit, with a stunning view of a watercourse, a few years later, a new phase is added and a building obstructs from now on the landscape which you had so much appreciated and which had convinced you to purchase this unit. Take the time to properly inform you about the future phases of the project of co-ownership that interests you, as well as the municipal regulations with respect to the zoning and building permits.