THE DIVIDED CO-OWNERSHIP
The divided co-ownership allows a building to be divided into fractions. Each fraction belongs to one or more people. Each owner of a fraction has the exclusive property of a private part of the building in addition to holding an undivided property right, therefore a share corresponding to the relative value of his fraction, in the common parts of the building, which are the property of all the co-owners. In addition, the declaration of co-ownership may affect certain common areas for the exclusive use of a co-owner, for example, a private balcony adjoining a private area could be a common area for restricted use.
Let's say you buy the second floor unit in a building held in divided co-ownership and comprising three floors. You are the sole owner of this accommodation (private part). You are also co-owner, with the owners of the first and third floor dwellings, of a share of the common parts of this building (for example: the land, the exterior walls, the roof, etc.).
CAN I BORROW TO BUY A FRACTION OF A CONDOMINIUM?
Each owner of a fraction of co-ownership can offer a mortgage on this fraction to guarantee the reimbursement of the amounts borrowed to make the purchase. Each mortgage is individual. None of the co-owners is threatened by the mortgage situation of their neighbors.
WHAT PRECAUTIONS SHOULD I TAKE BEFORE BUYING?
Each divided co-ownership is governed by a notarized declaration of co-ownership. The buyer, needless to say, must always read the declaration of co-ownership and fully understand its content and scope before committing. The informed buyer is also concerned about the quality of the management of the building. The balance sheet of expenses and condominium fees must also be consulted carefully. Before signing any document whatsoever, consult a specialist, your notary.
YOUR RIGHTS AND OBLIGATIONS
WHAT DOES THE DECLARATION OF CO-OWNERSHIP INCLUDE?
It is the declaration of co-ownership that establishes the division of the building into fractions. It includes the constitutive act of co-ownership, the building regulations and the description of the fractions.
The co-ownership constituting act determines the relative value of each fraction and indicates the method followed to establish it. It also fixes, according to this relative value, the contribution of each fraction to the common expenses of the building and to the compulsory contingency fund created under the law. Still according to this relative value, it also assigns the number of votes attached to each of the fractions. The constitutive act defines the destination of the building, that is to say the use (commercial or industrial, for example) that the owners can make of it as well as the destination of the private and common parts. It also specifies the respective powers and duties of the board of directors of the syndicate and the assembly of co-owners.
The building regulations enact the rules relating to the enjoyment, use and maintenance of the private areas and common areas. For example, it can prohibit the presence of certain animals in the apartments. These same regulations contain the rules relating to the operation and administration of the co-ownership, in particular with regard to the composition of the board of directors and the conditions relating to the office of director.
The description of the fractions contains the cadastral designation of the private and common parts of the building. It also contains a description of the real rights encumbering the immovable and those existing in its favor.
THE SYNDICATE AND THE ASSEMBLY OF CO-OWNERS
WHAT IS THE ROLE OF THE SYNDICATE AND OF THE ASSEMBLY OF CO-OWNERS?
The syndicate is created from the constitution of the co-ownership. Its mission is to ensure the conservation of the building, its maintenance and its administration. It is the board of directors that acts for the syndicate. The administrators establish the budget for the building.
The assembly of co-owners studies the questions which interest all the co-owners. Each co-owner is entitled to exercise his right to vote according to his number of votes.
The building co-owned by undivided co-ownership belongs to several people, the co-owners. None of these co-owners owns a private part of the building, 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 appartment. This apartment is not your own because your two friends are co-owners with you; similarly, you are co-owner, with them, of the first and third floor appartments. You and your friends are therefore joint owners of the entire triplex.
HOW TO CREATE A JOINT OWNERSHIP?
Joint ownership by co-ownership arises without formality when several people, the co-owners, acquire the same property. However, joint owners have every interest, especially in the case of a building, in establishing a written agreement between them.
The indivision agreement relating to a building must be published to be enforceable against third parties.
CAN EACH CO-OWNER BY JOINT OWNERSHIP MORTGAGE THEIR SHARE IN THE BUILDING?
The Civil Code of Quebec provides that each co-owner can grant a mortgage on his share of the building alone. The other joint owners are then in no way liable in the event of default by the mortgagee; the law even grants them, at that time, special rights to assert.
IS EACH CO-OWNER BY INDIVISION FREE TO SELL OR TRANSFER HIS SHARE?
Each co-owner by joint ownership is free to sell or transfer his share in the building unless otherwise provided in the joint ownership agreement. However, barring exceptions, the law provides for the right for other co-owners to be able to exclude, within the required time, the new purchaser by reimbursing the price of the sale or transfer plus costs. However, co-owners must exercise this right of withdrawal in the year of the sale or sale of this share.
HOW LONG CAN THE INDIVISION LAST?
The joint ownership agreement cannot provide that the joint ownership will last more than thirty years. This agreement can however be renewed.
CONTENT OF THE AGREEMENT
WHAT ARE THE PROVISIONS THAT MAY BE BENEFITABLE TO BE INSERTED IN AN INDIVISION AGREEMENT?
The indivision agreement may relate to:
- the duration of the agreement;
- the rights and obligations of joint owners in relation to the enjoyment of the premises;
- sharing of maintenance and renovation obligations;
- sharing of expenses;
- ownership of improvements;
- restrictions on sale;
- the building administration rules;
- the rules governing sharing in the event of the end of joint ownership.
Your notary can adequately advise you on the content of the indivision agreement.
The texts come entirely from the brochures of the Chambre des notaires du Québec.