Find out about “shareholding” properties

Stéphanie Simpson, Mortgage Broker
September 19, 2018




All about undivided co-ownership property by shares.

Acquiring a property is a very exciting adventure, and one of the most important purchases of our lives. This type of purchase, as we know it, comes down to 7 steps:

  1. Make visits to find the property of your dreams;

  2. Make a pre-qualification with your mortgage broker to establish your borrowing capacity;

  3. Establish property search criteria with your real estate broker based on budget;

  4. Make visits to find the property of your dreams;

  5. Make an offer to purchase and be accepted by the sellers;

  6. Obtain unconditional mortgage financing from the chosen financial institution, as well as mandate a building inspector to avoid unpleasant surprises;

  7. Sign the notary’s the deed of loans, as well as the deed of sale;

Did you know that there is an alternative to this kind of transaction? It has become increasingly popular over the last few years to purchase your own condo. Each year, several projects of this type are built in the greater Montreal area. Believe it or not, the demand is there, many people that prefer to live in a condo! It’s often more affordable than a single-family home and it’s less maintenance. No grass to cut, no leaves to pick up and no snow removal to worry about. In this type of acquisition, the owner is responsible for their school and municipal tax bills, their mortgage, as well as their share of condo fees charged according to the area of ​​the latter. Here, we talk about the division of condominiums.

In the case of an undivided co-ownership, the co-owners own the entire building up to their quota. Thus, there is only one school and one municipal tax account for the building and not one for each floor or for each unit as in the divided co-ownership. However, all homeowners may have a conventional mortgage linked to their unit, but they must absolutely be financed by the same branch of the same financial institution. Take note that not all lenders finance this type of transaction, so it is best to check with your mortgage or real estate broker to find out who can finance an undivided property.

“In the case of an undivided co-ownership, the co-owners own the entire building up to their quota. 

Apart from these types of condominiums, there are also so-called “shareholding” properties. Here, a corporation becomes the owner of the property in its entirety and shares are issued according to the size of the units in question. In other words, a 950-square-foot condo equals 950 shares. Although shares do not represent a tangible good, such as bricks, shareholders acquire an exclusive right to use their condo, but they do not actually own the premises in the strict sense of the term. As in the case of divided property, the “owners” will have co-ownership fees, as well as fees related to taxes, depending on the number of shares held. However, only the company that owns the building will be charged by the municipality and the school board for taxes related to the entire property. In turn, the company bills the shareholders based on their share. No co-ownership agreement will be published in the land register, which will avoid legal fees. As the undivided condo “per shares” do not have a syndicate of condominiums, only the directors of the company are called to the good management of the building. Farewell to the annual councils of co-owners! If the shares are sold,  the seller cannot be sued for hidden defects, since they never properly owned the condo.

“Farewell to the annual councils of co-owners! In case of the sale of the shares, the seller can not be sued for hidden defects, since he has never owned the condo. “

Although this type of co-ownership can be interesting on several points, the inventory of such buildings is limited on the Quebec market. We find this type of condominium in downtown Montreal and in the west of the city. In addition, it is impossible to finance this type of transaction in a conventional or insured file, since it is not a usual real estate transaction where the creditor can register a link on the property. In most recent news, HSBC offered a program for this type of purchase.

Before taking purchasing procedures toward “shareholding” property, I suggest you talk to a specialist in the field to demystify the advantages and disadvantages associated with it.

The next time we talk about buying a condo, without being the owner, and with a share certificate, you’ll know it’s possible!

3460, Rue Simpson, apt. PH-2, Ville-Marie (Montréal)