What Most People Don't Know About Co-ops, Co-ownership, Condos, & Other Multi-Family Communities

What do you understand about the differences between condominiums, co-ops, co-ownership, and common elements condominiums?

Ciao! Welcome to a new episode of Building Wealth Through Real Estate...Brick by Brick with me, Nico James-Bock, Founder of The CondoWiz™ Group and Broker at Royal LePage Signature Realty in Downtown Toronto.  In this episode I reveal the main differences between freehold ownership and the 4 main types of multi-family residential communities in the GTHA.

Condominium
Co-operative Housing (equity and non-equity)
Co-ownership
Common Elements Condominium

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Transcript

Nico James-Bock (00:01.57)
When we talk about the different types of ownership and communities, there are basically two types. There's the single-family home and the multi-family community. With the single-family home, there is one owner for a parcel of land, which includes the property, the land itself, and the home. The home and land have a unique pin. registered in the land titles. A PIN is a property identification number. 

The distinction between a freehold property and a multi-family community is that the freehold property is of total ownership to the individual or family or corporation. There's also a survey that is attached to the freehold property. When we pass over to a multifamily community, there are different types, different structures of ownership. I will be talking about the four main structures, types of ownership in a multifamily community. Welcome to a new episode of Building Wealth Through Real Estate.

My name is Nico James-Bock. I am the founder of the CondoWiz™ Wiz Group and a Broker at Royal LePage Signature Realty in Downtown Toronto. The four types that will be discussed today are condominium, a cooperative, co-ownership, and common elements condominium.

So let's jump right into the differences between these four types of multifamily communities. Talking about a condominium, this is a... The individual units in a condominium are owned by one to three people, first name, last name, or a corporation. That name is registered on a title.

Nico James-Bock (02:21.087)
The condominium unit can also have a parking, an owned parking or an owned locker or an exclusive use parking spot and or exclusive use locker. If the parking spot and or locker are owned, they too will have a unique pin registered and attached to the main pin, which is the unit, in land titles. Common areas and amenities are used by all residents within the community. So the unit itself is owned by an individual or corporation, along with the parking and or locker. But the common elements are enjoyed by all residents.

Also unique to a condominium structure is the board of directors, as well as the condominium itself is governed by the Condominium Act, which has its own rules, regulation and declaration. That's all part and parcel of a condominium ownership. Some have assisted living facilities.

within the condominium, medical and physical activities geared towards the residents. There are different types of condominiums in terms of how they are built. So there can be a low, medium or high rise. So one which has several units, and varying heights from 4 to 95 or even 100 stories. There are hard lofts. A hard loft is a conversion from one use to another. And the use has to be completely different. So a hard loft can be originally a church or a factory or warehouse.

Nico James-Bock (04:45.936)
And that is converted to residential use. There is also a soft loft. A soft loft is a new build with hard loft characteristics. So extra high ceilings, perhaps sliding doors, floor to ceiling windows. So loft characteristics in a new build.

Also, there can be a townhouse structure in a condominium. So a townhouse can be one level or up to four levels with the option of having also a rooftop terrace. Passing to the next type, which is the co-op or cooperative.

Not many people are familiar with the difference between condominium cooperative. the cooperative is an equity cooperative, is equity cooperative ownership, is a buyer purchases one or more shares in a corporation. So that the corporation owns and manages the building together with exclusive rights to occupy a specific unit. So unlike a condominium, which the owner owns the actual unit, in a cooperative, there's exclusive right to occupy the unit. 

One important distinction is that the requirement of unit owners to obtain consent from the co-ops board of directors to sell or mortgage his or her interest. So that is a major distinction between condominium and cooperative. In a co-op, the owners are jointly liable also for property taxes, operating expenses and mortgage payments on the building. Okay, so if one owner defaults, then the others have to make up the shortfall.

Nico James-Bock (07:12.004)
Co-ops therefore do not have the same statutory safeguards enjoyed by condominium owners under the Condominium Act. Moving on to the next form, the third form, is co-ownership. In a co-ownership, the ownership structure is slightly different from that of a condominium and a co-op.

The buyer of a co-ownership unit purchases an individual percentage of the building and land, not the title to a specific unit or a share in a corporation like a co-op, together with the exclusive right to occupy the unit. The buyer's interest is registered on title to the building. And similar to a cooperative, a co-ownership is governed by its incorporated documents, rules and regulations and bylaws and the contractual agreements with the other members. They do not have the statutory safeguards enjoyed by condominiums with their condominium act and an owner in a co-ownership can mortgage his or her interest in the property without getting the consent of the properties board of directors. So that's another distinction between the co-op and

co-ownership. Now, there is a fourth type, which is gaining in popularity, and it also is not clearly understood by many people, including buyers and also renters.

It is the common elements condominium. So it's kind of like the best of both worlds for certain people. So it's the benefits of having a freehold property, a freehold home and surrounding, immediately surrounding property together with shared interest in a common tied piece of land.

Nico James-Bock (09:30.793)
So the surrounding land can include parking facilities, which includes a visitor parking, perhaps a parkette, or other elements like access roads and sidewalks. So that entire community is governed by a corporation, the common elements portion and the home or homes on which this community sits is wholly owned by the residents. So they have complete ownership of the home and they can do whatever they want with their particular home in terms of renovations and improvements.

So with a common elements condo, there's an entity which is called a parcel of a tied land or POTL. And that is the portion of the community that is a common use. Okay. So that's the main distinction. So that is the four main...

types of multi-family communities. There are of course others being purpose-built rental buildings, leaseholds, life leases, well as the land lease.

So that wraps up this episode. I will be doing a deep dive of the other types in another episode. The full description and distinction between these four types are in the show notes as well as my contact information. That wraps up this episode of building wealth through real estate Brick by Brick. Ciao ciao!