Daily Archives: April 8, 2009

By Martin K. I. Rumack

Condominiums and Co-operatives are legal structures that define both the exclusive rights and the shared rights of individuals who purchase a unit/percentage interest in buildings created as one of these types of legal entity.

IMPORTANT FEATURES OF CONDOMINIUMS AND CO-OPERATIVES FOR THE PURCHASER

CO-OPERATIVE (No Shared Liability)

• Co-operative Corporation is the only registered owner of property (registered on title); purchaser does not own unit
• Purchaser has long term, exclusive use of individual unit through a I A-ase, or Occupancy Agreement, not a Deed.
• Purchaser acquires shares in the Co-operative Corporation and is a shareholder in the Corporation.
• Purchaser becomes a member of the Co-operative Corporation which:
• (a)owns and manages the affairs of the building on behalf of the Shareholders according to the Co-operative/ Shareholder/ Occupancy Agreement, the Corporation’s By-laws, and/or private contracts, and the Rules and Regulations;
• (b)grants exclusive occupation right; to shareholders of a specific unit; and,
• (c)represents the interests of the Shareholders.
• Purchaser can finance the unit, using their shares and leasehold interest in the unit, only if there is no prohibition on pledging shares as security. Only a few lending institutions finance these types of purchases of shares and/or grant loans on these types of properties.
• Purchaser is assessed for a percentage share (based on the size of unit in comparison to the whole building) of common expenses.
• Purchaser pays for their percentage share of property taxes as a part of their monthly common expenses. The Co-operative Building is assessed and taxed as one structure.
• No legislation requiring a Capital Reserve Fund to be established for maintenance of building. Most Co-operative Corporations do have a Capital Reserve Fund for maintenance of building. No legislation exists requiring or outlining requirements for a Reserve Fund Study. No legislation exists requiring compliance with the recommendations of a Reserve Fund Study.
• Purchaser can participate in management decisions by sitting on the Board of Directors and voting as a Shareholder of the Co-operative Corporation at the General Annual Meetings.
• Purchaser is subject to the Co-operative/Shareholder/ Occupancy Agreements, Rules and Regulations, and By-laws of the Co-operative Corporation and other contractual documentation.
• Purchaser needs consent of the Board of Directors of the Co¬operative Coition/ton to sell shares, assign Lease for unit and to rent unit, which is not unreasonably withheld. There is the odd exception. Additionally, consent is required to pledge shares as security.
• Purchase of a unit should be subject to receipt of an Estoppel Certificate which identifies any outstanding or pending payments, assessments, or legal actions, re-. the unit or Corporation together with all other documents which are included.
• Co-operative Corporations may have yearly audited Financial Reports issued to all shareholders and are self-managed or managed by a professional Management Company or self-managed.

CONDOMINIUMS

• Purchaser acquires ownership of an individual unit by a Deed.
• Purchaser acquires ow rei.    hip to individual unit by a Deed pursuant
• to provisions of The Condominium Act.
• Purchaser acquires a percentage interest in the common areas of the building.
• Purchaser becomes a member of the Condominium Corporation which:
• (a)manages the affairs of the building according to the Condominium Act, and more particularly the Declaration, the By-laws, and the Rules and Regulations; and,
• (b)represents the interests of the Owners.
• Purchaser can individually finance her/his own unit. Large number of lending institutions finance purchases of condominiums and/or grant loans on these types oft.    one ties.
• Purchaser receives an individual property tax bill.
• Purchaser is assessed for percentage share (based on the size of unit in comparison to the whole building) of common expenses.
• Condominium Act requires a reserve monetary fund to be established for maintenance of building. Most comply with the provisions of the Act and generally with the Reserve Fund Study. Study must be updated every 3 years.
• Purchaser can participate in management decisions by sitting on the Board of Directors and voting as a member of the Condominium Corporation at Annual General Meetings.
• Purchaser is subject to the Declaration, Rules and Regulations, and By-laws of the Condominium Corporation.
• Purchaser does not need consent of the other owners or the Condominium Corporation to sell, rent or mortgage his/her unit.
• Purchase of a unit should be subject to receipt of a Status Certificate which identifies any outstanding or pending payments, special assessments, or legal actions, re: the unit or corporation, amongst other items together with all other documents required to be included.
• Condominium Corporations must have yearly audited Financial Reports issued to all owners and are almost always managed by a professional Management Company.

Martin K. I. Rumack is a Toronto based Barrister and Solicitor and is a regular contributor to the Muddy York Blog. Contact Information:  202 – 2 St. Clair Avenue East, Toronto, Ontario, M4T 2T5, Tel:  (416) 961-3441 (Ext. 26)